Sugar industry protests WTO ‘injustice’

Officials in the sugar industry wrote to Prime Minister Narendra Modi to complain about what they called “injustice” inflicted on them by the petroleum marketing companies (WTO). The letter comes at a time when cane dues in election-linked Uttar Pradesh are becoming a headache for the ruling BJP.

In the letter, a copy of which is with the Indian Express, Niraj Shirgaonkar, president of the India Sugar Mills Association (ISMA) protested the MOC’s decision to prioritize corn ethanol as a feedstock rather than ‘to cane juice in terms of ethanol supply. . The genesis of the problem lies in the expression of interest (EOI) launched by MOCs on August 27 this year, which rocked the industry. The industry has addressed this issue in recent months, but there has been no response from JIs. The letter to the Prime Minister follows months of deadlock even as the year of ethanol commercialization (December to November 2021-22) has begun.

One of the main objections raised by the industry is the preferential treatment accorded by JIs to ethanol produced from maize as a raw material compared to sugar cane. Ethanol – the fuel additive – is produced as a by-product of the production of sugar or the fermentation of carbohydrates in the raw material obtained from corn, rice, etc. Government policy has been to encourage ethanol produced directly from cane juice or sugar syrup, as these have been the highest selling price. However, the industry in its letter protested the OEMs’ decision to assign the highest point to ethanol produced from corn-based feedstocks while that of cane received the lowest points. . This, the letter pointed out, was contrary to the spirit of the ethanol program unveiled by the Center in 2018.

MOCs had launched an addendum / corrigendum to the August EOI that gave preference to new ethanol plants over existing ones in the ethanol supply in ESY 2021-22. Only factories that sign long-term supply contracts in accordance with the tender will receive preferential treatment over other existing suppliers. Industry said the purpose of the August Expression of Interest was to enable new units to obtain loans under the special interest grant program unveiled by the Center in its national policy on 2018 biofuels. Many existing suppliers were excluded / made ineligible for new plants. for the call for tenders.

The above EOI has allocated 648 crore liters of ethanol production capacity across the country. However, the industry pointed out that this was done without taking into account the availability of the raw material. As a result, states with sugarcane corn got a lower allocation compared to states with no raw material. Uttar Pradesh, Maharashtra and Karnataka, which together produce 70 to 80 percent of the country’s sugar cane and therefore ethanol, have been assigned less capacity than their production capacity in the call for ‘offers. The sudden change in policy has put a question mark in the minds of sugar factories that have invested or borrowed to start an ethanol production capacity.

During Lok Sabha’s current session, the Center spoke of Rs 4,445 crore as pending dues with Uttar Pradesh topping the list with Rs 3,752 crore. Ethanol was a game-changer and brought equity capital to the sugar industry and helped it pay its cane dues on time. Cane dues and failure to pay factories on time may become an element of opposition voting in future UP polls.

Rachel J. Bradford