Oil Min pitches for priority lending to boost ethanol output

Aiming to achieve 10 per cent ethanol blending with petrol, Oil Minister Dharmendra Pradhan today favoured inclusion of ethanol in priority sector lending of banks to boost production and said he would take up this issue with the Finance Ministry.
Pradhan said the country is likely to achieve 5 per cent ethanol blending with petrol this year and the government is ready to create additional storage capacity to achieve the target of 10 per cent blending.
The Minister also asked the sugar industry to transfer cane payments directly into farmers' bank account.
"Industry has demanded inclusion of ethanol in the priority sector lending of banks. I am going to take up this issue with the Finance Ministry," Pradhan said, addressing a workshop on ethanol, organised by industry body ISMA.

More investments are required for setting up new distilleries and expanding ethanol manufacturing capacity from the current level of 224 crore litres, he said.
Besides increasing ethanol production, the Minister said there is a need to increase storage capacity as at present oil marketing companies have space to keep ethanol required for five per cent blending.

For achieving 10 per cent blending, the minister said there is a need to create awareness among states about the programme in view of higher state taxes and inter-state movement curbs imposed by various state governments.
Even Prime Minister Narendra Modi has asked state governments to end the "license raj" to make the ethanol blending programme a big success, he added.

The Minister also made it clear that the NDA government is promoting ethanol blending, keeping farmers' interest in mind, even as ethanol buying by OMCs has become a costlier affair in the wake of fall in global crude oil prices.
The government has fixed ethanol price at Rs 48.50-49.50 per litre (ex-factory), without linking it to crude oil price, and removed excise duty on ethanol.
The Minister also noted that the NDA government has taken several steps to revive the cash-starved sugar industry to ensure they clear cane arrears.
"Now, the industry has started moving forward. We want to see it reaches the next level," he said.

ISMA President Tarun Sawhney said, "This will be the first year, we will be achieving very close to 5 per cent blending, against 3.5 per cent last year."
The industry has contracted to supply 120 crore litres of ethanol, which will not only help reduce crude oil imports by Rs 5,500-6,000 crore but also bring down emissions, thereby addressing pollution.
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"My ministry is actively considering creation of storage for ethanol to accommodate 10 per cent blending," Pradhan said on the sidelines of the event.
Ethanol is being purchased at much higher price than the current crude oil rates to ensure sugar mills make cane payment to farmers, he added.

Asked when will the government achieve 10 per cent blending, the Minister said, "We are ready to buy ethanol, it is for industry to create capacity and supply the required quantity."
On whether the government is increasing crude oil stock, taking advantage of falling global prices, Pradhan said, "We are planning how to leverage the new price. Nobody knows how long it will continue. The Ministry is planning how to utilise this window in India's advantage. We have many options before us. It is at a concept level."
The government is utilising the existing crude oil stocks, which were purchased at old price of USD 35-40 per barrel, he added.