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Bihar wants its alcohol put to better use as state looks to become ethanol hub 

With Modi govt looking to promote blending of ethanol in petrol, Bihar last week launched an Ethanol Production Policy, 2021, the first state in the country to do so.

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Patna: Bihar may be under Prohibition but the JD(U)-BJP government in the state is looking to promote the production of ethanol or ethyl alcohol, which is increasingly being blended with petrol as it leads to fewer emissions. 

Bihar Industries Minister Syed Shahnawaz Hussain last week launched the Ethanol Production Policy, 2021, aimed solely at the production of the organic compound, becoming the first state in the country to do so.  

“On this side, sugarcane, maize and broken rice will be poured in and from the other, dollars will flow out,” he declared to a sceptical opposition in the assembly. 

Hussain later explained to ThePrint that the policy was being brought in to take advantage of the Modi government’s decision to advance the deadline for oil companies to blend in 20 per cent of ethanol in petrol. The deadline has been moved from 2030 to 2025. 

As of now, petrol is blended with 2-3 per cent ethanol.

“I had actually meant that since the Government of India intends to increase the mix from 2-3 per cent to 20 per cent, we will be saving dollars that India uses to import petroleum,” he said.

“Bihar is the natural place for ethanol production. Bihar produces 160 lakh metric tonnes of sugarcane, of which less than half go for sugar crushing. We produce 40 lakh metric tonne of maize. Broken rice is abundant.”

Hussain said that the government had already received 30 proposals for investment in ethanol production. “We are negotiating with the big players but I will make the announcement after we have signed an MoU (Memorandum of Understanding),” he said.  

The new policy promises capital subsidy of up to Rs 5 crore, waiving stamp and registration duties, revoking land conversion fees and other tax-related investment. 

Ethanol, an active ingredient in alcohol, is produced from biomass such as sugarcane waste. The central government is looking to promote its production with Prime Minister Narendra Modi stating that ethanol blending could help India save Rs 12,000 crore on oil imports over four years. 


Also read: Why an RJD MLA reached Bihar assembly with a stethoscope to check Nitish Kumar


A tall order 

Hussain, however, faces a tall order in his efforts to establish Bihar as an ethanol hub. 

He admitted that as of now Bihar only produces 12 crore litres of ethanol while UP leads the list with 159 crore litres followed by Maharashtra (128 crore litres) and Karnataka (78 crore litres). 

“But if the proposals become a reality, we will be producing about 50 crore litres in the near future,” Hussain said. 

This also isn’t the first time that Bihar has flirted with the ethanol production idea. In 2006, the then Nitish Kumar government looked to promote a similar policy. 

Quite a few investors, including Reliance Petroleum, had shown interest in taking over 15 government-owned sugar mills that had been shut down.  

In 2008, however, the then Union agriculture ministry, led by NCP chief Sharad Pawar, turned down the Bihar government’s proposal for standalone ethanol production units. 

Then Bihar sugarcane minister Nitish Mishra, who headed the bid, said the state lost investment proposals to the tune of  Rs 14,000 crore as investors backed out. 

“The bid failed because of the central government’s (then UPA) refusal to have standalone ethanol production units. But if it has to succeed this time, the industry department must ensure the availability of land for investors,” said Mishra who is now a BJP MLA.

“Secondly, though there is a single-window system in Bihar it is actually a multiple-window system where investors are made to wait and are hassled before their proposals get implemented. Investors have the option of investing outside Bihar and it is important that they should be given a red carpet welcome here.” 

‘Have Modi govt’s backing’

Hussain, however, said that this time around, Bihar has the Modi government’s backing for the new policy, which will primarily promote standalone ethanol production units. “It will also go a long way in fulfilling our other manifesto promise of 19 lakh jobs,” he said. 

Additional chief secretary in-charge of the industry department, Brajesh Malhotra, told ThePrint that the government is looking to offer a number of concessions to investors.  

“We will be handing over land that belongs to the Bihar Industrial Area Development Authority on a priority basis. We have a dedicated cell for ethanol production units and we will revise their status on a weekly basis,” he said. “We are also aiming to give clearances within 30 days of the proposals.” 

For now, however, investors are cautious about the promises. “Ethanol production is a safe business as our buyers will be oil companies and since India proposes to hike the blending, there will be tremendous demand,” said Rajesh Bansal, a Delhi-based businessman who has sent in a proposal to set up a plant in Bihar.

“But we will be looking at the infrastructure made available to us and, of course, the law and order situation.” 

(Edited by Arun Prashanth)


Also read: Nitish in spot over police bill proposing a special force with power to arrest without warrant


 

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