The Central Government has extended the timeline for disbursement of loan/completion of ethanol projects up to 30 September 2023 in respect of all the schemes notified during 2018-2021, the Ministry of Consumer Affairs, Food & Public Distribution said in a release. The extended timeline for ethanol projects would help in enhancing ethanol production capacities further with the vision to boost the agricultural economy, to reduce dependence on imported fossil fuel, to save foreign exchange on account of crude oil import bills and to reduce air pollution, it said.
India has achieved a milestone in ESY 2020-21 with 408 crore liters of ethanol, achieving a blending rate of 10.02 per cent. By 11 June, 2023, ESY 2022-23 recorded 310 crore liters blended, reaching 11.70 per cent blending, the ministry said. “The target for the current ESY 2021-22 is 12 per cent blending. To achieve 20 per cent blending by 2025, ethanol production capacity needs to be expanded to 1700 crore liters,” it added.
The previous timeline for disbursement of loans for the schemes was up to 31 March 2023. However, due to multiple challenges in processing loan applications and coordination with multiple agencies, project proponents were unable to adhere to the time limit for the disbursement of loans from banks/ financial institutions.
“The government is extending financial assistance in the form of interest subvention at 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 a one-year moratorium,” the ministry said.
Under the scheme for extending financial assistance to sugar mills for augmentation of ethanol production capacity, the central government extends soft loan through banks to the mills for setting up new distilleries or expansion of existing distilleries and installation of incineration boilers or installation of any method as approved by Central Pollution Control Board for Zero Liquid Discharge. The Government bears interest subvention for the loan disbursed.
The government aims to increase the production of ethanol and also supply of ethanol for the Ethanol Blended with Petrol (EBP) Programme, especially in the surplus season. With India’s grain-based distilleries witnessing a significant capacity growth from 206 crore litres in 2013 to 433 crore litres, the national ethanol production capacity reached to 1244 crore litres in 2023. In 2013-14, the supply of ethanol to Oil Marketing Companies (OMCs) was 38 crore litres with a blending level of 1.53 per cent. By the year 2020-21, the production and supply of fuel-grade ethanol to OMCs has increased by 8 times.