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Centre Opens Interest Subsidy Window For Sugar Mills To Submit Ethanol Proposals

On Friday, the central government announced that sugar mills have six months until October to propose new bids for mortgages at a reduced interest rate to build new distilleries or expand the existing facilities to increase first-generation ethanol capacity in the country.

Kritika Madhukar
The country currently has an ethanol production capacity of 849 crore litres
The country currently has an ethanol production capacity of 849 crore litres

A window has been created for additional submissions from project proponents who have bought land for projects and gained environmental clearance it added, in order to ensure that only genuine project proponents are granted in-principle approval by the Union Food Ministry. According to an official from April 21 to October 22, the six-month window will be open.

According to the government new, grain-based distilleries would be built in deficit states such as the northeast, southern states such as Tamil Nadu, Andhra Pradesh, and Telangana, and states such as Bihar, Madhya Pradesh, and others. This would benefit the distribution of ethanol production.

 

Since 2018, the government has been implementing a scheme to provide loan facilities to sugar mills and distilleries with the goal of increasing ethanol production and supply under the Ethanol Blended with Petrol (EBP) Program, particularly during the surplus season, and further making improvements in the sugar mills' liquidity position, and allowing them to clear farmer cane price arrears. 

The government is providing financial support in the form of interest subventions on loans to be provided by banks for five years, including a one-year moratorium, at a rate of 6% per year or 50% of the rate of interest paid by banks, whichever is lower.

 

Ethanol production capacity is being increased to reduce the country's reliance on imported fossil fuels, save foreign cash on crude oil import expenses, and reduce pollution.

 

The country currently has an ethanol production capacity of 849 crore liters, with 569 crore liters of molasses-based refineries and 280 crore liters of grain-based distilleries according to the government. From 2013-14 to 2020-21, the output of fuel-grade ethanol and its supply to oil marketing companies (OMCs) increased eightfold.

It reached a maximum of 302.30 crore liter in 2020-21, attaining 8.10% blending. In the current fiscal year 2021-22, 158 crore litres of ethanol were blended with gasoline until April 17, resulting in a 9.77% blend. According to an official, it is projected that a 10% blending target would be met in 2021-22.

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