Food min to seek further 74-bln-rupee loan for 168 ethanol projects

Tuesday, Dec 4

    By Ashna Mishra
    NEW DELHI – After facilitating a soft loan of 61.39 bln rupees, the food ministry will soon seek Cabinet approval to facilitate additional loans worth around 74 bln to sugar mills to enhance their ethanol production capacity, sources said.
    The loans would cost the government around 16 bln rupees as interest subvention, according to sources. 
    “In addition to the 114 projects already approved, the plan is to facilitate loans for another 168 proposals by mills,” one of the sources said.
    In September, the government had approved 114 proposals by mills across the country for enhancement of ethanol capacity. For these proposals, the Centre facilitated soft loans worth 61.39 bln rupees to sugar factories.
    For mills whose proposals have been approved, interest subvention at 6% a year or 50% of the interest rate charged by banks, whichever is lower, on loans extended by banks will be borne by the central government for five years.
    In June, the Union Cabinet had approved measures for sugar mills to enhance their ethanol production capacity by facilitating soft loans worth 44.4 bln rupees to them. However, in August, the government removed the cap on the loan amount for sugar mills to avail interest subvention.
    In a first for the country, the government has also approved differential pricing for ethanol based on the quality of molasses used.
    For 2018-19 (Dec-Nov), the government has fixed the price of ethanol derived from B-heavy molasses at 52.43 rupees a ltr. For ethanol made directly from 100% cane juice, the price has been fixed at 59.13 rupees a ltr.
    The price of ethanol made from C-heavy molasses, however, has been fixed at 43.46 rupees a ltr, much lower than the other two categories.
    Sugar mills usually produce ethanol from C-heavy molasses, which is the slurry left after extraction of sugar from concentrated cane juice.
    The government has been trying to encourage mills to use 100% concentrated cane juice and B-heavy molasses, from which sugar has been extracted only once, to produce ethanol as this ensures higher output and reduction in sugar production.
    On an average, a tonne of C-heavy molasses yields 250 ltr of ethanol. The same quantity of B-heavy molasses would yield about 350 ltr of ethanol, while 100% concentrated cane juice would yield about 600 ltr, according to an industry expert.
    Diversion of sugarcane juice to ethanol instead of sugar would help the government scale down the likely glut in sugar output next season, and help it meet its target of increasing ethanol blending in petrol to 10% which will, in turn, help reduce the crude oil import bill.
    The country is staring at a second consecutive year of surplus sugar production. Indian Sugar Mills Association has estimated the country’s sugar output in 2018-19 at 31.5-32.0 mln tn.
    With carryover stock from this season seen at about 10.4 mln tn, the total supply in 2018-19 is pegged at 41.9-42.4 mln tn, way higher than the estimated consumption of 25.5 mln tn.  End

Edited by Maheswaran Parameswaran

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