Government May Extend Loan Disbursal Period For Ethanol Projects By 6 Mos

The government is likely to extend the period of disbursement of loans from banks to sugar mills by a period of six months, a government official said today.

As part of an incentive announced in June last year, the Centre had approved 61.4-bln-rupee soft loans to help sugar mills boost ethanol production.

“Mills should get loans within a year after government’s in-principle approval but bank functioning has been delayed…Now mills have been given six months extra to avail those loans from banks,” one of the officials said.

The government had also approved an interest subvention of up to 13.32 bln rupees, along with a one-year moratorium on loan repayment for setting up new distilleries, expanding capacity and upgrading existing distilleries, and to encourage mills to divert cane to ethanol.

Of the 282 applications received by the government for addition and expansion of distillery capacity, 114 were approved in September. Of these 114, only 45 mills have been sanctioned loans worth 21.9 bln rupees and of the 45 mills, loans of 9 bln rupees have been disbursed to only 33 mills, another official said.

Sugar mills now have more time to avail loans from banks, which would help them expand their existing capacities and build new distilleries.

The government has been looking at ways to divert the excess sugar and ethanol seems the only way out. For this, government has taken a number of initiatives to help mills divert cane, molasses, sugar stocks and sugar syrup to ethanol and which would help reduce sugar production.

Indian Sugar Mills Association has pegged the country’s closing stock at a record-high of 14.58 mln tn for 2018-19 (Oct-Sep). Production is estimated at 26.85 mln tn, of which, 850,000 tn sugar is expected to be diverted to ethanol.

For 2019-20 (Dec-Nov), the government has increased the price of ethanol made from B-heavy molasses to 54.27 rupees a ltr from 52.43 rupees a ltr in 2018-19, and that of ethanol made from 100% cane juice and C-heavy molasses to 59.48 rupees a ltr and 43.75 rupees a ltr, respectively.

The government also allowed oil marketing companies to buy ethanol made from sugar syrup at a similar price as that of ethanol made from cane juice. – Cogencis