Pradhan wants ethanol output in priority sector lending

Petroleum Minister Dharmendra Pradhan said he'd be soon asking the finance ministry to ensure ethanol production is brought under the priority sector lending norm by banks, so that mills are encouraged to invest in adding distillery capacity.

He said he was also seeking an assurance from the mills that they’d produce enough ethanol to achieve a full five per cent blending with petrol for the country's need, the first time ever, in the 2015-16 crop season that started in October.

In a related development, the environment ministry on Friday notified stricter standards for the sugar industry, to minimise water pollution. Production of ethanol from sugar distilleries is the second biggest pollutant of the Ganga river.

Government rules have mandated five per cent ethanol blending with petrol for more than a decade but the target has never been met, due to disagreement over the price oil marketing companies (OMCs) would pay to millers.

With the central government fixing Rs  48.50-49.50 a litre for the 2015-16 season that started in October, mills have entered into contracts to supply a total of 1,200 million litres of ethanol.  

Including ethanol production under the priority lending norm of banks would ensure sugar mills could take loans for this at two to three percentage points less than the existing market rates.

Pradhan said the Centre planned to augment ethanol storage facilities at the three government-owned OMCs, so that sugar mills could raise output without worrying about storage and transportation.

Speaking at the same event, Indian Sugar Mills Association president Tarun Sawhney had highlighted the need for cars and other vehicles that could run fully on ethanol. He said there was a need to set up several more sugarcane-based ethanol distilleries to increase the average blending to 10 per cent.

If the industry does supply 1,200 million litres of ethanol, this would reduce crude oil imports by close to Rs 6,000 crore, beside cutting automobile emissions.

Unsugared view

Petroleum Minister Dharmendra Pradhan said on Friday there was competition among politicians to control sugarcane cooperatives in Maharashtra and Karnataka, and it was difficult to identify the real owners. Observing that people are doing politics in the name of sugar co-ops, he said, "There is a competition among politicians of these two states that who is owning how big a cooperative. How big a politician is depends on this."