* DFPD has accorded in
principal approval for interest subvention scheme to 422 proposals with a
capacity of 1,684 crore ltrs for a loan amount of Rs. 42,000 crores
* Ethanol Blending Policy - Boon for farmers
* With
the vision to boost agricultural economy, to reduce dependence on
imported fossil fuel, to save foreign exchange on account of crude oil
import bill & to reduce the air pollution, Government has fixed
target of 10% blending of fuel grade ethanol with petrol by 2022 &
20% blending by 2025.
* With
a view to support sugar sector and in the interest of sugarcane
farmers, the Government has also allowed production of ethanol from
B-Heavy Molasses, sugarcane juice, sugar syrup and sugar; and
encouraging sugar mills to divert excess sugarcane to ethanol. In
previous sugar season 2019-20 about 9 LMT of sugar was diverted to
ethanol. In current sugar season 2020-21, it is likely that more than 20
LMT of excess sugar would be diverted to ethanol. By 2025, it is
targeted to divert 50-60 LMT of excess sugar to ethanol, which would
solve the problem of high inventories of sugar, improve liquidity of
mills thereby help in timely payment of cane dues of farmers. In past 3
sugar seasons about Rs. 22,000 cr revenue was generated by sugar mills/
distilleries from sale of ethanol to OMCs.
To
increase production of fuel grade ethanol and to achieve blending
targets, the Govt of India has allowed use of maize and rice with FCI
for production of ethanol. Government has declared that rice available
with FCI would continue to be made available to distilleries in coming
years. The extra consumption of surplus food grains would ultimately
benefit the farmers as they will get better price for their produce and
assured buyers; and thus will also increase the income of crores of
farmers across the country.
Government
has fixed price of ethanol from maize as Rs 51.55/litre & rice
available with FCI as Rs 56.87/litre for ethanol supply year 2020-21.
For FY 2020-21, Government has fixed the price of FCI rice to Rs
2000/quintal for production of ethanol. For FY 2021-22, Government has decided to continue the price of FCI rice to Rs 2000/quintal for production of ethanol.
This will give confidence to industry about the stability in raw
material price and its availability. For the purpose of supply of
surplus rice for the production of ethanol, distilleries are at liberty
to choose the nearest FCI depot as per requirement/logistics.
In
current ethanol supply year (ESY) 2020-21 (December to November) to
achieve 8.5% blending target, about 325 Cr ltrs ethanol is required to
be supplied to OMCs. As on 26.04.2021, about 349 cr ltrs ethanol have
been allocated by OMCs to sugar mills/ distilleries, out of which
contracts of about 302 cr ltrs have been signed by distilleries &124
cr ltrs have been supplied. Efforts are being made by DFPD &MoPNG /
OMCs to ensure achievement of blending target. Also, in next ESY
2021-22, it is likely to supply more than 400 cr ltrs of ethanol to OMCs
to achieve 10 % blending.
With
a view to increase existing capacities further, DFPD has notified
modified interest subvention scheme on 14.01.2021 for setting up new
grain based distilleries/ expansion of existing grain based
distilleries, dual feed distilleries & molasses based distilleries
to produce ethanol & production of ethanol from other 1G feed
stocks. 422 proposals with a capacity of 1684 cr ltrs for a loan amount
Rs. 42000 crore have been approved by DFPD. It is expected that from
the proposals approved, more than 600 cr ltrs may come up in next 2 to 4
years. Thus, the ethanol distillation capacity from these projects and
ongoing projects may reach to 1500 cr ltrs by 2024-25 which would be
sufficient to achieve 20% blending target.
Sugarcane
and ethanol is produced mainly in three states viz Uttar Pradesh,
Maharashtra and Karnataka. Transporting ethanol to far flung States from
these three states involves huge transportation cost. By bringing new
grain based distilleries in the entire country would result in
distributed production of ethanol and would save a lot of transportation
cost and thus prevent delays in meeting the blending target & would
benefit the farmers across the country.
For
production of ethanol, there is sufficient availability of feed stocks;
& Govt. has also fixed remunerative prices of ethanol derived from
various feed stocks. Moreover, OMCs being the assured buyer for ethanol
has given comfort for purchase of ethanol from distilleries for next
10-15 years. Hence, these ethanol projects are viable. Ministry of
Environment, Forest & Climate Change has also streamlined the
process of getting environment clearance (EC) for ethanol projects.
Department of Financial Services and State Bank of India have also
issued Standard Operating Procedure (SOP) for sanctioning and disbursal
of loans for ethanol projects which would expedite sanctioning and
disbursal of loans.
Production
of ethanol would not only facilitate diversion of excess sugar to
ethanol but would also encourage farmers to diversify their crops to
cultivate particularly maize/corn which needs lesser water. It would
enhance production of ethanol from various feed stocks thereby,
facilitate in achieving blending targets of ethanol with petrol and
would reduce import dependency on crude oil, thereby, realizing the goal
of Atmanirbhar Bharat. It will also enhance income of farmers as
setting up of new distilleries would not only increase demand of their
crops but would assure farmers of getting better price for their crops.