Timeline for disbursement of loan & completion of ethanol projects extended to boost agri-economy
The decision to extend the 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.
The Centre has extended the timeline for disbursement of loan for the completion of ethanol projects up to 30 September 2023. The extended timeline for ethanol projects tends to boost agricultural economy, reduces fossil fuel dependency, saves foreign exchange and cuts air pollution. In the meantime, the ethanol production capacity has reached all time highest to 1,244 crore litres. A record distilleries supply over 310 crore liters of ethanol to oil market companies has also been recorded by 11th June 2023.
The decision has been taken 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, 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.
It is also interesting to note that the government bears interest subvention for the loan disbursed. Hence, the Central Government has decided to extend the timeline for disbursement of loans up to 30th September 2023 in respect of all the schemes notified during 2018-2021.
Earlier, the timeline for disbursement of loans for the schemes related to ethanol projects was only 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 or financial institutions.
It was seen that the projects were unable to be completed within the given timeline. Therefore, there is a need to extend the timeline for the disbursement of loans under interest subvention schemes announced earlier during 2018-2021.
The government is extending financial assistance in the form of interest subvention, which is at 6% per annum or 50% 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 Centre is trying to increase the production and supply of ethanol for the Ethanol Blended with Petrol (EBP) Programme, especially in the surplus season.
In the past few years, the government policy changes have led to a remarkable increase in molasses-based distilleries’ capacity, soaring from 215 crore liters in 2014 to an impressive 811 crore liters in the past 9 years. India’s grain-based distilleries witnessed a significant capacity growth from 206 crore litres in 2013 to 433 crore litres.
Hence, the national ethanol production capacity reached to 1244 crore litres in 2023. In 2013-14, the supply of ethanol to Oil Marketing Companies was 38 crore litres with a blending level of 1.53%. By the year 2020-21, the production and supply of fuel-grade ethanol to Oil Marketing Companies (OMCs) has increased by 8 times.
India achieved a historic milestone in ESY 2020-21 with 408 crore liters of ethanol, achieving a blending rate of 10.02%. By 11.06.2023, ESY 2022-23 recorded 310 crore liters blended, reaching 11.70% blending. The target for the current ESY 2021-22 is 12% blending. To achieve 20% blending by 2025, ethanol production capacity needs to be expanded to 1700 crore liters.
The decision to extend the 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.
