Government cleared 1.1-trln-rupee loan for ethanol units since 2018
Informist, Thursday, Sep 21, 2023
By Afra Abubacker and Sayantan Sarkar
NEW DELHI – The Department of Food and Public Distribution has in principle approved loans worth 1.13 trln rupees since 2018 to 1,291 sugar mills and distillery units to increase their ethanol production capacity, according to government data with the Indian Sugar Mills Association exclusively accessed by Informist.
The loans approved so far are expected to have added production capacity of 135,863 kl of ethanol a day, the Indian Sugar Mills Association said. "Of these 1,291 units, 901 are sugar mills," it said.
The food ministry gives in-principle approved loans to distillery units under interest subvention schemes to increase ethanol production. In June, it extended the deadline to disburse loans for ethanol projects under interest subvention schemes to Sep 30 from Mar 31 earlier. The aim is to achieve the target of 20% ethanol blending in petrol by 2025-26. Under the government's Ethanol Blended Petrol Programme, oil marketing companies sell petrol blended with ethanol.
In a letter to the government dated Jul 29, the Indian Sugar Mills Association requested the continuation of the interest subvention scheme. Further, it urged the government to increase the price of ethanol to 69.85 rupees per ltr from 65.61 rupees a ltr currently, considering the 10-rupee hike in the fair and remunerative price of sugarcane to 315 rupees per 100 kg for the 2023-24 (Oct-Sep) sugar season.
"It is estimated that about 4.5 mln tn of sugar will be diverted towards the production of ethanol next season (Oct-Sep), as compared to about 4.1 mln tn estimated to be diverted this year," the association said. In its preliminary estimate, it pegged the country's net sugar output after diversion to ethanol for 2023-24 (Oct-Sep) at 31.7 mln tn, down 3.4% on year from 32.8 mln tn in the ongoing season ending September.
At a press meet on Wednesday, Indian Sugar Mills Association's President Aditya Jhunjhunwala said the organisation will release its final sugar output estimates in October. "We will do satellite mapping by October-end and that should give us a clear picture of the crop condition." He also said the association had urged the government for further support to expand capacities of ethanol manufacturers.
In its letter to the government, the association said about 12 bln ltr of ethanol is needed to achieve the 20% blending target by 2025-26. In 2022-23 (Dec-Nov), the sugar industry signed contracts for 4 bln ltr of ethanol supply, it said.
The Indian Sugar Mills Association estimates that an additional 8 bln ltr of ethanol is required to meet the blending programme target. For this, an investment of 175 bln rupees with a reasonable return on investment is needed to increase the ethanol production capacity of mills. End
