To boost ethanol production as part of its efforts to achieve 20 per cent blending with petrol, the Government has given in-principle approval to 185 sugar mills and standalone distilleries to avail Rs 12,500 crore of loans for capacity addition of about 468 crore litre of ethanol per annum. Apart from promoting ethanol production from sugarcane, the food ministry is making efforts to manufacture ethanol using surplus rice with state-owned FCI as well as maize. The move is aimed at boosting ethanol blending with petrol, which currently stands at nearly 5 per cent. In the last two years, 70 ethanol projects were sanctioned loans of Rs 3,600 crore.
In the normal sugar season, about 320 Lakh Metric Tons (LMT) of sugar is produced against domestic consumption of 260 LMT. This 60 LMT of surplus sugar which remains unsold, blocks funds of sugar mills to the tune of about Rs. 19,000 crore every year thereby affecting liquidity positions of sugar mills resulting in accumulation of cane price arrears of farmers.
“Under the ethanol interest subvention scheme for molasses-based distilleries, the government in September 2020 has opened a window for 30 days to invite more applications from sugar mills/ distilleries, which were examined by DFPD... “about 185 applicants (85 sugar mills and 100 molasses-based standalone distilleries) are being granted in-principle approval for availing loan amount of Rs 12,500 crore for capacity addition of about 468 crore litres per annum,” the Food Ministry said in a statement. These projects would be completed in another 3-4 years, thus help in achieving the desired blending target, it added.
In the past two years, loans of about Rs. 3600 crores have been sanctioned for 70 such ethanol projects (molasses based distilleries) which involve capacity enhancement of 195 crore litres; out of these 70 projects, 31 projects have been completed adding a capacity of 102 crore litres so far. With the efforts made by Government, the existing installed capacity of molasses based distilleries has reached to 426 cr ltrs.
In the current Ethanol Supply Year 2019-20 only 168 crore litres of ethanol is likely to be supplied to OMCs for blending with petrol thereby achieving 4.8% blending levels. However, in the ensuing Ethanol Supply Year 2020-21, efforts are being made to supply 325 crore ltrs of ethanol to OMCs thereby achieving 8.5% blending; and in the ethanol supply year 2021-22 ending in November, 2022 efforts are being made to achieve 10% blending target which is quite possible in view of the concerted efforts made by the Government.
For Year 2020-21, bids of 322 crore litres (289 crore from molasses and 34 crore litre from grains) have already been received in first tender floated by OMCs and in subsequent tenders more quantity from molasses and grain based distilleries will come, thus Government will be able to achieve 325 crore litre and 8.5% blending target.