185 sugar factories and distilleries get a loan of 12,500 crore rupees to set up ethanol units

NEW DELHI: The Food Ministry said on Friday it had given its approval in principle to 185 stand-alone sugar factories and distilleries to receive 12,500 crore in loans for the additional capacity of about 468 crore of liters of ethanol per year as part of its efforts to achieve 20 percent blending with gasoline.

In the past two years, 70 ethanol projects have been sanctioned with loans of Rs 3,600 crore.

Besides promoting the production of ethanol from sugar cane, the ministry is working to make ethanol from surplus rice with the state-owned FCI as well as corn.

The move aims to boost the blending of ethanol with gasoline, which currently stands at nearly 5 percent.

“As part of the ethanol interest subsidy scheme for molasses distilleries, the government opened a 30-day window in September 2020 to invite more candy / distilleries applications, which were reviewed by the DFPD …

“About 185 applicants (85 sugar factories and 100 stand-alone molasses distilleries) receive approval in principle to receive a loan of 12,500 crore rupees for a capacity addition of approximately 468 crore liters per year,” said the Food Ministry said in a statement. .

These projects would be completed in 3 to 4 years, thus helping to achieve the desired mixing objective, he added.

During the normal sugar season, around 320 lakh tons of sugar are produced against a domestic consumption of 260 lakh tons.

These 60 lakh tons of excess sugar which remain unsold block the funds of the sugar factories to the tune of approximately Rs 19,000 crore each year, thus affecting the liquidity positions of the sugar factories, leading to an accumulation of arrears in the price of the cane of the farmers, the ministry said.

To deal with excess sugar stocks, the government provides financial assistance to factories for the export of sweeteners.

However, India, as a developing country, can export sugar by providing financial assistance for marketing and transport until 2023 only, in line with WTO agreements, the statement said.

For a long-term solution to dealing with the excess sugar, the government has encouraged the diversion of excess cane and sugar to ethanol to supply them to the Petroleum Marketing Companies (OMCs) for blending. with gasoline.

This move would not only reduce the dependence of imports on crude oil, but also increase the incomes of sugar cane producers.

The ministry said the government previously set a target of 10 percent blending fuel-grade ethanol with gasoline by 2022 and 20 percent blending by 2030, but it is now preparing a plan to prepare for the 20 percent blend target. .

The government encourages sugar factories, distilleries and entrepreneurs to establish new distilleries and expand their existing distillation capacities.

It grants financial assistance in the form of an interest subsidy for 5 years at a maximum interest rate of 6 percent on loans granted by sugar factories / distilleries to banks for the implementation of their projects.

In the past two years, loans of around Rs 3,600 crore have been sanctioned for 70 of these ethanol projects (molasses-based distilleries) which involve a capacity increase of 195 crore liters. Of these 70 projects, 31 projects have been completed, adding a capacity of 102 crore liters to date.

The existing installed capacity of the molasses distilleries reached 426 crore liters.

As blending targets cannot be achieved by simply diverting cane / sugar to ethanol, the Food Ministry said the government is encouraging distilleries to produce ethanol from other sources. raw materials like cereals.

“Therefore, concerted efforts are being made by the government to improve the ethanol distillation capacity in the country from 720 crore liters to produce ethanol from 1st generation (1G) raw materials like sugar cane. , molasses, cereals, sugar beet, sweet sorghum, etc. », Indicates the press release. .

The government is making efforts for the production of ethanol from surplus rice with FCI to supply OMCs to be blended with gasoline during the ethanol supply year 2020-21 (December-November).

Efforts are also being made to produce ethanol from corn in states that have sufficient corn production.

In the current 2019-2020 ethanol supply year, only 168 million liters of ethanol will likely be supplied to MOCs for blending with gasoline, reaching blending levels of 4.8%.

However, in 2020-2021, the goal is to deliver 325 crore liters of ethanol to MOCs to achieve a blend of 8.5%. In the 2021-2022 ethanol supply year ending in November 2022, the goal is to achieve 10% blend.

For the year 2020-21, offers of 322 crore liters (289 crore of molasses and 34 crore of cereals) have already been received in the first tender launched by the WTO and in the following tenders, more molasses and grain distilleries will come.

“Over the next few years, with a 20% ethanol blend with gasoline, the government will be able to reduce crude oil imports, a step forward to become Atma Nirbhar in the petroleum industry and this will help also to increase the income of farmers and create additional jobs in distilleries, ”the statement said.

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