Centre extends timeline for disbursement of loan, completion of ethanol projects

The Central Government on Tuesday extended the timeline for the disbursement of loans and completion of projects related to ethanol.

According to the official statement, to facilitate Project Proponents to complete their projects and to avail of benefits of interest subvention, the Central Government has therefore decided to extend the timeline for disbursement of loans up to September 30, 2022, in respect of all the schemes notified during 2018-2021.

Central Government with a view to increasing production of ethanol and its supply under the Ethanol Blended with Petrol (EBP) Programme, especially in the surplus season and thereby improve the liquidity position of the sugar mills enabling them to clear cane price arrears of the farmers, notified different interest subvention schemes for sugar mills and distilleries during 2018-2021.

It also read that government is extending financial assistance in the form of interest subvention @ 6 per cent per annum or 50 per cent of the rate of interest charged by banks, whichever is lower, on the loans to be extended by banks for five years including one-year moratorium.

Under the schemes, the timeline for disbursement of loans for ethanol projects is up to March/April 2022. However, due to the unavoidable and unfortunate situations caused by COVID-19, project proponents were unable to adhere to the time limit for disbursement of loans from Banks/ Financial institutions and unable to complete their projects in a given time frame. Therefore, there is a need to extend the timeline for disbursement of loans under interest subvention schemes announced earlier during 2018-2021.

Based on official information, the Ethanol distillation capacity of molasses-based distilleries was only 215 cr litres prior to 2014. However, in the past 7 years due to the policy changes made by the Government, the capacity of molasses-based distilleries has increased by one and a half times and is currently at 555 cr litres. The capacity of grain-based distilleries which was 206 cr litres in 2013 increased to 280 cr litres.

Thus, the total ethanol production capacity in the country has reached 835 crore litres. However, ethanol production capacities are required to be enhanced to about 1700 cr litres to achieve 20 per cent blending by 2025. The decision to extension of timeline for ethanol projects would help in enhancing ethanol production capacities further.

Till the year 2013, the supply of ethanol to OMCs was only 38 crore litres with blending levels of only 1.53 % per cent in ethanol supply year (ESY) 2013-14. Production of fuel-grade ethanol and its supply to OMCs has increased by 8 times from 2013-14 to 2020-21. In ESY 2020-21, we touched a historically high figure of about 302.30 cr litres thereby achieving 8.10 per cent blending. In the current ESY 2021-22, about 141 cr litres ethanol has been blended with petrol till 03.04.2022 thereby achieving 9.66 per cent blending. It is expected that in the current ethanol supply year 2021-22, we will be achieving a 10 per cent blending target.

With the vision to boost the agricultural economy, reduce dependence on imported fossil fuels, save foreign exchange on account of crude oil import bills and reduce air pollution, the Government has fixed a target of 10 per cent blending of fuel-grade ethanol with petrol by 2022 and 20 per cent blending by 2025.

( With inputs from ANI )