Sugar sector seeks sops for ethanol & gasoline blenders

Ashok B Sharma

New Delhi, Jan 6: The sugar industry has urged finance minister, Yashwant Sinha and petroleum minister, Ram Naik to give some fiscal incentive, to the oil companies engaged in blending 5 per cent ethanol with gasoline, in the forthcoming Union Budget.

The Indian Sugar Mills Association (ISMA) stated that it is necessary that the policy of blending ethanol with gasoline be made mandatory for oil companies and they be given some incentives in return on the lines of the US and some other countries.

The ISMA memorandum stated that the projections made by the taskforce for the Tenth Plan show a comfortable position with regard to supply of ethanol to meet the needs for 5 per cent blend on countrywide basis. However, a grey area still remained with regard to the pricing of ethanol. In this context, ISMA suggested that ethanol should be priced between Rs 14 to 15 per litre at ex-factory rate and should not be based on the assumed price of imported petrol at the entry port as is being contemplated in official circles.

ISMA also demanded that Bihar being a major sugar producing state, ethanol blending of gasoline should be taken up there in the first phase alongwith the other eight selected states — Maharashtra, Uttar Pradesh, Gujarat, Karnataka, Tamil Nadu, Andhra Pradesh, Punjab and Haryana. ISMA has stated that interest subsidy allowed to power cogeneration plants is now marginalised with drastic reduction in the rate of interest on deposits and otherwise. As a financial incentive for cogeneration projects the ministry had announced that the net rate of interest after interest subsidy should not be less than 11 per cent. In this context, ISMA has demanded that the interest subsidy as recommended for different configuration of equipment may be allowed over and above the prevailing interest rates.

The capital subsidy presently allowed in regard to joint ventures and IPP projects set up in the co-operative and public sector sugar mills be extended to private sugar mills forthwith, it said adding that the current discriminatory approach on sectoral consideration is highly unjust and time consuming. ISMA assured that if the discriminatory approach is removed then the target of achieving 10 per cent of additional power generation from renewables in the next 10 years would become possible. The sugar industry alone, has the enormous potential to generate 5,000 mw power.

ISMA demanded that the renewable energy generators be freely permitted to effect third party sales including inter-state sales for which wheeling charges should be determined uniformly on an all-India basis. The tariff determined for wheeling should also be preferential for renewables ie lower than in case of conventional fuels. Power cogeneration plants and renewable sources of energy should be exempt under the purview of merit order despatch.