Govt extends timeline for loan disbursement for ethanol projects till Sept

The government on Tuesday extended the timeline for disbursement of loan for ethanol projects under different schemes till September 30 this year, as part of its efforts to boost domestic production and achieve ethanol blending of 20 per cent by 2025.

In an official statement, the government said it has decided to extend the timeline for disbursement of loans till September 30, 2022 in respect of all the schemes notified during 2018-2021.

The move is aimed at facilitating entities to complete their projects and avail benefits of interest subvention.

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

The government is extending financial assistance in the form of interest subvention at 6 per cent per annum or 50 per cent of 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 loan for ethanol projects is up to March/April, 2022.

"However, due to unavoidable and unfortunate situation caused by COVID-19, project proponents were unable to adhere to the time limit for disbursement of loan from banks/financial institutions and unable to complete their projects in a given time frame.

"Therefore, there is a need to extend the time line for disbursement of loans under interest subvention schemes announced earlier during 2018-2021," the statement said.

Ethanol distillation capacity of molasses-based distilleries was only 215 crore litres prior to 2014. In the past seven years, the capacity has increased by one-and-a-half times and is currently at 555 crore litres.

Similarly, the capacity of grain-based distilleries has risen to 280 crore litres from 206 crore litres in 2013.

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 crore litres to achieve 20 per cent blending by 2025. The decision for extension of time line for ethanol projects would help in enhancing ethanol production capacities further," the statement said.

Till 2013, supply of ethanol to OMCs (oil marketing companies) was only 38 crore litres, with blending levels of only 1.53 per cent in ethanol supply year (ESY) 2013-14.

The 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 crore litres thereby achieving 8.10% blending. In the current ESY 2021-22, about 141 crore litres ethanol have been blended with petrol till 03.04.2022 thereby achieving 9.66 per cent blending. It is expected that in current ethanol supply year 2021-22, we will be achieving 10 per cent blending target," the statement said.

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