The Centre has extended the timeline for disbursement of loans up to March 31 under the ethanol blending programme interest subsidy scheme, notified first in 2018, to facilitate entrepreneurs to complete their projects while availing of government support.
In a notification issued on October 6, the Food Ministry said applicants who have submitted their applications after the date of notification (dated 19.07.2018) of the scheme but within the cut-off date prescribed in the notification and in the case of whom loans were disbursed to them prior to the in-principle approval from the ministry, will also be eligible for interest subvention under the scheme.
The ministry has asked the beneficiaries of the scheme to complete the projects within two and a half years from the date of disbursement of the first installment of loan from the bank.
Government’s objective
The government had notified different interest subvention schemes for sugar mills and distilleries between 2018 and 2021 in order to increase the production of ethanol and also improve the liquidity position of sugar mills, enabling them to clear the cane arrears of farmers. Currently, interest subvention at 6 per cent per annum or 50 per cent of the rate of interest charged by banks, whichever is lower, is available to sugar mills for five years, including a one-year moratorium under the “Scheme for extending financial assistance to sugar mills for enhancement and augmentation of ethanol production capacity”.
In April, the government extended the timeline for the disbursement of loans under the scheme by six months, which expired on September 30.
However, ethanol production capacities are required to be enhanced to about 1,016 crore litres per annum to achieve a 20 per cent blending target by 2025. The decision to extend the time line for ethanol projects would help in enhancing ethanol production capacities further, the food ministry said.
Purchases of ethanol by oil marketing companies (OMCs) were about 38 crore litres, with blending levels of only 1.53 per cent in ethanol supply year (ESY) 2013-14 (December-November). But, production of fuel grade ethanol and its supply to OMCs has increased by eight times from 2013–14 to 2020–21. Until September 25 in ESY 2021-22, about 352 crore litres were supplied to OMCs, helping them to achieve 10 per cent blending.