Ethanol Policy
About the Scheme
The Central Government is emphasizing on achieving energy security of the country with a target of reducing import dependence by adopting biofuels as one of the measures. Country's import dependence for fuel requirement in tandem with environmental pollution issues have driven the need for biofuels that have superior environment benefits and are economically competitive with fossil fuels. Thus, in order to promote biofuels in the country, the National Policy on Biofuels-2018 aims to bring in renewed focus on the renewable energy sector keeping in mind its sustainability and cost effectiveness. The National Policy on Biofuels-2018 inter-alia allows the production of ethanol (biofuel) from sugarcane juice, sugar containing materials like sugar beet, sweet sorghum, starch containing material like corn, cassava, broken rice, FCI rice, maize etc.
The Central Government with a view to increase production of ethanol and its supply under Ethanol Blended with Petrol (EBP) Programme, especially in the surplus season and thereby to improve the liquidity position of the sugar mills enabling them to clear cane price arrears of the farmers notified the scheme namely “Scheme for extending financial assistance to sugar mills for enhancement and augmentation of ethanol production capacity” vide notification No. S.O. 3523(E), dated 19.07.2018, which was subsequently amended vide notifications No. S.O. 3952(E), No. S.O. 5219(E), No. S.O.47 (E), No. S.O. 4104(E) and No. S.O. 1523(E) dated 09.08.2018, 11.10.2018, 04.01.2019, 14.11.2019 and 20.05.2020 respectively. Thereafter schemes for extending financial assistance to sugar mills & molasses based standalone distilleries for enhancement and augmentation of ethanol production capacity were notified on 08.03.2019 vide notifications No. S.O. 1227(E) & S.O. 1228(E). Further vide notifications No. S.O. 3135(E) & S.O. 3136(E) dated 15.09.2020, a window was opened for 30 days for inviting applications under the scheme from molasses based stand alone distilleries and from sugar mills. Further, the Central Government, notified the modified scheme namely- “Scheme for extending financial assistance to project proponents for enhancement of their ethanol distillation capacity or to set up distilleries for producing 1st Generation (1G) ethanol from feed stocks such as cereals (rice, wheat, barley, corn & sorghum), sugarcane, sugar beet etc.” on 14.1.2022.
To achieve the set target of 20% blending by 2025, Central Government has decided to open a window for inviting fresh applications from those project proponents who have acquired land for ethanol projects and obtained Environmental Clearance for enhancement of their ethanol distillation capacity or to set up distilleries for producing 1st Generation (1G) ethanol from feed stocks such as cereals (rice, wheat, barley, corn & sorghum), sugarcane, sugar beet etc.”
Assistance under the Scheme
(i) Interest subvention @ 6% per annum or 50% of rate of interest charged, whichever is lower, by banks/National Cooperative Development Corporation (NCDC)/ Indian Renewable Energy Development Agency Limited (IREDA)/ Non-Banking Financial Companies (NBFCs)/any other financial institutions which are eligible for re-finance from NABARD, on the loans to be extended shall be borne by the Central Government for five years including one year moratorium against the loan availed by project proponents.
(ii) Interest subvention under the scheme shall be provided on loan amount sanctioned and disbursed in respect of each project based on the proposed capacity, limited to the in principle approval by Department of Food and Public Distribution (DFPD).
(iii) Interest subvention would be available to only those distilleries which will supply at least 75% of ethanol produced in an Ethanol Supply Year (ESY) (Dec-Nov) from the added distillation capacity to OMCs for blending with petrol.
(iv) Assistance shall not be available to sugar mills and distilleries which have availed benefits under any other scheme of Central Government for the same project.
(v) In case of grain based distilleries, interest subvention would be applicable only if they are using or will be using dry milling technique to produce DDGS.
Eligibility
Assistance under the scheme shall be available for:
(i) Setting up grain based distilleries/expansion of existing grain based distilleries to produce ethanol. However, benefits of interest subvention scheme is to be extended to only those distilleries which are using or will be using dry milling technique to produce Dried Distillers Grain with Solubles (DDGS).
(ii) Setting up new molasses based distilleries/expansion of existing distilleries (whether attached to sugar mills or standalone distilleries) to produce ethanol and for installing any method approved by Central Pollution Control Board for achieving Zero Liquid Discharge (ZLD).
(iii) To set up new dual feed distilleries or to expand existing capacities of dual feed distilleries.
(iv) To convert existing molasses based distilleries (whether attached to sugar mills or standalone distilleries) to dual feed (molasses and grain/ or any other feed stock producing 1G Ethanol); and also to convert grain based distilleries to dual feed.
(v) To set up new distilleries / expansion of existing distilleries to produce ethanol from other feed stocks producing 1G ethanol such as sugar beet, sorghum, cereals etc.
(vi) To install Molecular Sieve Dehydration (MSDH) column to convert rectified spirit to ethanol in the existing distilleries.
Links
Ethanol Booklet 2023 - Ministry of Petroleum and Natural Gas