News: Reliance eyes cane processing

(BL 25/05/2006) New Delhi - Reliance Industries Ltd (RIL) is slated to make a presentation before the Union Agriculture Minister, Sharad Pawar, on May 31 on its proposed foray into sugarcane processing.

According to sources, the company is planning to set up three units, each with capacity to crush over 10,000 tonnes of cane per day (tcd), in Maharashtra. Unlike normal sugar factories, these would convert the entire sugarcane juice to ethanol.

The Government's `gasohol programme' mandates oil-marketing companies to dope 5 per cent of their petrol with ethanol. The ethanol from the proposed units would basically meet Reliance's captive requirements.

The sources said that the first plant is to come up at Kurkumbh in Daund taluka of Pune. The other two units are in Kolhapur and Osmanabad districts, for which sites are apparently under finalisation.

The Kurkumbh site currently houses a mono ethylene glycol (MEG) facility, originally promoted by SM Dyechem Ltd and acquired by RIL in January 2005. RIL had justified the acquisition citing proximity to Maharashtra's sugar belt that ensured sufficient alcohol availability. The Kurkumbh facility is RIL's sole alcohol-based MEG plant, with all its other units using naphtha or natural gas feedstock.

From available information, it seems that Reliance plans to have the sugarcane processing plant in the MEG facility for meeting its captive ethanol needs. A key issue in this connection is the Sugarcane Control Order, 1966, whose provisions currently apply only in the case of cane used for manufacture of sugar, gur and khandsari.

But since RIL's proposal involves direct processing of cane for ethanol - which has never been attempted in the country and finds no mention in the Order - there is an interpretation that the company would be exempt from its provisions. These include clauses dealing with fixation of `reserved area' for factories to source cane, maintenance of 15-km minimum radial distance between neighbouring units and even applicability of Statutory Minimum Price for sugarcane.

"The May 31 meeting is likely to look into all these issues. There would also be efforts to address the concerns of existing mills on excess drawal of cane from their reserved areas," the sources added.