Patna: A central directive that prohibits production of ethanol from sugarcane juice has dealt a severe blow to Bihar government's plan to develop the state as an ethanol hub with five investment proposals amounting to Rs 14,000 crore lost.

The insertion of explanation (3) in clause 3 (sub-clause in the sugarcane (control) amendment order, 2007 of the Union Ministry of Consumer Affairs, Food and Public Distribution that came into effect from December 28 has prevented Bihar from taking up these proposals, official sources said.

Explanation (3) states: "production of ethanol directly from sugarcane juice shall be allowed in case of sugar factories only."

The Centre's order led to the state losing five major investment proposals through which 15 new sugarcane juice-to-ethanol manufacturing facilities were to be set up in Bihar.

Bihar State Industrial Promotion Board (BSIPB) had approved these projects and cabinet sanction for all but three had also been obtained, the sources said.

"Although the state government has not received any formal communication from these parties, there is no doubt that these projects are effectively lost. There is no way they can proceed with the projects till the December 2007 order remains in place," said Nitish Mishra, who was recently shifted as Minister for Disaster Management from his earlier sugarcane industries department.

It was during Mishra's 28-month tenure as sugarcane minister that the state government decided to allow direct production of ethanol from sugarcane juice through an amendment to the Sugarcane Regulation and Supply Act, 1981 in March, 2007.

"The central government order has negated that move. Our efforts to develop Bihar as an ethanol hub has suffered a setback," Mishra said.

The proposal by M/s Indian Gasohol Ltd (Erode, Tamil Nadu) to establish ten units of 100 per cent export oriented ethanol plants in various parts of Bihar, having a total capacity of five million tonne at investment of Rs 13,557 crore, could not be entertained by the state government because of the Centre's decision, the sources said.

Three other units proposed by a Poland-based NRI under the banner of M/s Braj Industries Pvt Ltd would also be affected, they said.

The ethanol manufacturing units, each involving an investment of Rs 82 crore, were to be set up at Purnea, Sahpur-Kamal in Begusarai and another in Supaul, sources said.

M/s S S Infrastructure Private Limited (Darbhanga) had secured approval for investing Rs 95.04 crore for an ethanol plant at Sukhait in Jhanjharpur block of Madhubani.

Many investors had lined up to establish direct sugarcane-to-ethanol production facilities because such units made better financial sense in the context of Centre's plan to lace petro-fuels with a higher percentage of ethanol, Mishra added.

Source : PTI