Sugar mills, oil manufacturing companies and banks have expressed their willingness to enter into a tri-partite agreement for producing, buying and paying for the ethanol through an escrow account. Banks can consider giving loans to sugar mills even with weak balance sheets.
This decision was taken at a meeting of oil manufacturing companies (OMCs) with cane commissioners of major sugar producing states and sugar industry associations to discuss ways and means to increase the supply of ethanol to OMCs.
Ethanol is a green fuel and its blending with petrol saves the country’s foreign exchange to certain extent. The agreement would facilitate sugar mills to avail loans from banks to set up new distilleries or to expand their existing distilleries, thereby enhancing the overall distillation capacity in the country and thus would help in achieving the blending target under Ethanol Blended with Petrol programme.
It would ensure increase in supply of ethanol in the current as well as in ensuing ethanol supply years.
In 2018-19, 189 crore ltrs of ethanol was supplied by sugar mills and grain based distilleries to OMCs thereby achieving five per cent blending target. In 2019-20, efforts were made to supply 190-200 crore ltrs of ethanol for blending with petrol to achieve 5.6 per cent of blending.
The Government has fixed 10 per cent blending target for mixing ethanol with petrol by 2022 and 20 per cent blending in 2030.
To achieve achieving blending targets, the government has been encouraging sugar mills and molasses based standalone distilleries to enhance their ethanol distillation capacity. Soft loans has been extended to 64 projects with a capacity of 165 crore ltrs in two years.
To encourage sugar mills to divert excess sugarcane to produce ethanol for blending with petrol, the Government has allowed production of ethanol from B-Heavy Molasses, sugarcane juice, sugar syrup and sugar; and has also fixed the remunerative ex-mill price of ethanol derived from these feed-stocks.