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Rs 12,500 crore loans nod for sugar mills to set up ethanol units

The Ministry of Consumer Affairs, Food and Public Distribution on Friday mentioned it has given in-principle approval to 185 sugar mills and standalone distilleries to avail Rs 12,500 crore of loans for capability addition of about 468 crore litre of ethanol each year as a part of its efforts to attain 20 per cent mixing with petrol.

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

Apart from selling ethanol production from sugarcane, the ministry is making efforts to fabricate ethanol utilizing surplus rice with state-owned FCI in addition to maize.

The transfer is aimed toward boosting ethanol mixing with petrol, which at present stands at almost 5 per cent.

“Under the ethanol curiosity subvention plan for molasses-based distilleries, the ministry in mid of September 2020 has opened a window for 30 days to invite more applications from sugar mills/ distilleries, which have been examined by Department of Food and Public Distribution (DFPD).

The Food Ministry mentioned in an announcement that “nearly 185 applicants (85 sugar mills and 100 molasses-based standalone distilleries) have been granted in-principle approval for availing loan amount of Rs 12,500 crore for production of about 468 crore litres per year,”

These projects can be accomplished in another 3-4 years, thus assist in reaching the specified blending goal, it added.

In the normal sugar season, about 320 lakh tonnes of sugar is produced towards domestic consumption of 260 lakh tonnes.

This 60 lakh tonnes of surplus sugar which stays unsold, blocks funds of sugar mills to the tune of about Rs 19,000 crore yearly, thereby affecting liquidity positions of sugar mills leading to accumulation of cane value arrears of farmers, the ministry mentioned.

To cope with surplus sugar sharesthe federal government is offering monetary help to mills for the export of sweetener.

However, India being a creating nation can export sugar by extending monetary help for advertising and transport solely as much as 2023 as per WTO preparations, the assertion mentioned.

For long run solution to deal with excess sugar, the government has been encouraging diversion of extra sugarcane & sugar to ethanol for supplying to Oil Marketing Companies (OMCs) for mixing with petrol.

The transfer wouldn’t solely cut back import dependency on crude oil but may also improve the earnings of sugarcane grower.

The Ministry mentioned that the government had earlier fixed a goal of 10% mixing of fuel-grade ethanol with petrol by 2022 and 20% mixing by 2030. However, now it’s getting ready a plan to pre-pone achievement of 20% blending goal.

The government India is encouraging sugar mills, distilleries and entrepreneurs to set up new distillery factories and to increase their current distillation capacities.

It is extending monetary help by means of interest subvention for five years at 6% maximum price of interest towards the loans availed by sugar mills/distilleries from banks for establishing their plants.

In the previous two years, loans of about Rs 3,600 crore have been granted for 70 such ethanol projects (molasses-based distilleries) which involve capability enhancement of 195 crore litres. Out of those 70 projects, 31 projects have been accomplished including a capacity of 102 crore litres to date.

The existing installed capacity of molasses-based distilleries has reached to 426 crore litres.

As the mixing targets can’t be achieved solely by diverting sugarcane/sugar to ethanol, the food ministry mentioned that the government is encouraging distilleries to produce ethanol from different feedstocks like grains.

“Therefore, joint efforts are being taken up by Govt. to increase ethanol distillation capacity in the country by 720 crore litre for producing ethanol from 1st Generation (1G) feedstocks like sugarcane, molasses, grains, sugar beet, jower etc,” the statement mentioned.

The authorities are making efforts for the production of ethanol from excess rice with FCI to produce to OMCs to combine with petrol in Ethanol Supply in end of Year 2020-21.

The efforts are additionally being made to produce ethanol from maize in states which have adequate cultivation of maize.

In the present ethanol provide Year 2019-20 solely 168 crore litres of ethanol is more likely to be equipped to OMCs for mixing with petrol thereby reaching 4.8 per cent mixing ranges.  However, in 2020-21, the goal is to produce 325 crore litres of ethanol to OMCs for reaching 8.5% blending.

For Year 2020-21, bids of 322 crore litres have already been obtained in the first tender floated by OMCs and in subsequent tenders, extra quantity from molasses and grain-based distilleries will come.

“In next few years with 20% ethanol mixing with petrol, Government will be able to reduce import of crude oil, a step towards being Atma Nirbhar in the petroleum sector and this will also help in enhancing the income of farmers and creating additional employment in distilleries,” the assertion mentioned.