Centre extends deadline for ethanol projects by six months to Sept 30

Many loan proponents failed to meet earlier deadline of March 31 due to challenges in processing applications and coordination with mutiple agencies

The government has extended the deadline for loan disbursement or project completion of ethanol production facilities by six months, the Ministry of Consumer Affairs has announced. Aiming to massively raise ethanol output, the Centre has been providing interest subvention-based soft loans to sugar mills since 2018 for setting up new distilleries or expanding facilities.

The previous timeline for loan disbursement under the schemes on ethanol projects was March 31, 2023. However, due to several challenges in processing loan applications and coordination with multiple agencies, project proponents were unable to adhere to the time limit for disbursements from banks, the Ministry said on Monday.

Under the Ethanol Blended with Petrol (EBP) programme, the Centre is extending financial assistance by way of interest subvention at 6 per cent a 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 a one-year moratorium. The scheme also aims to improve the liquidity position of sugar mills during the surplus season, and enable them to clear cane price arrears of the farmers.

Annual ethanol production capacity reached all-time highest to 1,244 crore litres in 2023, up from 421 crore litres in 2014. Distilleries have supplied a record 3.10 billion litres of ethanol to oil marketing companies by June 11, government data showed.

The ‘National Policy on Biofuels’ notified in 2018 envisaged an indicative target of 20 per cent ethanol blending in petrol by 2030 which was advanced to 2025-26. To achieve this, ethanol production capacity needs to be expanded to 17 billion litres. India crossed 10 per cent ethanol blending in November, 2022.