Banks may give loans to sugar mills with weak balance sheets

Tribune News Service

New Delhi, August 22

Banks can consider giving loans to sugar mills with weak balance sheets to help enhance their overall distillation capacity and achieve the blending target under the Ethanol Blended with Petrol programme, the Food and Public Distribution Ministry has said.

India has set a blending target (for mixing ethanol with petrol) of 10 per cent by 2022 and 20 per cent by 2030.

Diversion of excess sugarcane and sugar is the long-term solution to address the problem of excess stock and improve the viability of the sugar industry, say officials.

Besides, ethanol is a green fuel and its blending with petrol also saves the country’s foreign exchange.

A meeting with representatives of leading banks, oil marketing companies (OMCs), cane commissioners of major sugar-producing states and sugar industry associations yesterday discussed ways and means to increase the supply of ethanol to OMCs to achieve the objective of increasing the blending.

According to a statement, it was agreed that as producers of ethanol (sugar mills), buyers of ethanol (OMCs) and lenders (banks) are willing to enter into a tripartite agreement on producing, buying and paying for it through an escrow account. Banks can consider giving loans to sugar mills even with weak balance sheets.

“This would facilitate mills to avail loans from banks to set up new distilleries or to expand their existing distilleries, thereby enhancing the overall distillation capacity and help achieve the blending target under the Ethanol Blended with Petrol programme,” it said.

States and the industry assured that efforts would be made to increase the ethanol supply in the current as well as in ensuing ethanol supply years, as per officials.

During the last ethanol supply year 2018-19, about 189 crore litres of ethanol was supplied by sugar mills and grain-based distilleries to OMCs, thereby achieving five per cent blending target and in the current ethanol supply year 2019-20, efforts are being made to supply 190-200 crore litres of ethanol for blending with petrol to achieve 5.6 per cent blending.

Break quote: India has 10% blending target for mixing ethanol with petrol by 2022 and 20% by 2030