The government has extended the timeline for disbursement of loans up to September 30 with regard to all the schemes under the ethanol blending programme notified during 2018-2021 to facilitate the completion of their projects for entrepreneurs while availing interest subvention benefits.

In order to increase production of ethanol and its supply under Ethanol Blended with Petrol (EBP) programme and also to improve the liquidity position of sugar mills, enabling them to clear cane arrears of farmers, the government had notified different interest subvention schemes for sugar mills and distilleries during 2018-2021. Interest subvention at 6% per annum or 50% of rate of interest charged by banks, whichever is lower, is available to sugar mills for five years including one-year moratorium.

But, the timeline for disbursement of loan for ethanol projects was valid up to March 31, 2022 under these schemes. “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 timeline for disbursement of loans under interest subvention schemes announced earlier during 2018-2021,” the Food Ministry said in a statement.

Capacities up

Ethanol distillation capacity of molasses based distilleries was only 215 crore litres prior to 2014. However, in past seven years the capacity of molasses-based distilleries have increased to 555 crore litres due to the policy changes made by the government. Capacity of grain-based distilleries increased to 280 crore litres from 206 crore litres in 2013.

However, ethanol production capacities are required to be enhanced to about 1,700 crore litres to achieve 20 per cent blending target by 2025. The decision for extension of timeline for ethanol projects would help in enhancing ethanol production capacities further, the ministry said.

Purchases of ethanol by oil marketing companies (OMCs) were about 38 crore litres with blending levels of only 1.53 % in ethanol supply year (ESY) 2013-14 (December-November). But, 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, about 302.30 crore litres were supplied to OMCs helping them to achieve 8.10 per cent blending. In the current ESY 2021-22, about 141 crore litres of ethanol have been blended with petrol till April 3, achieving 9.66 per cent blending. It is expected that in current ESY, 10 per cent blending target will be met.

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