India extends fuel ethanol loan interest aid scheme

The Indian government has expanded its loan interest aid scheme for bioethanol distilleries to cover additional first-generation feedstocks, following yesterday's approval by the economic affairs cabinet committee.

Ethanol producers using grains, sugar beet, sweet sorghum or cereal feedstocks will be eligible for five years' government interest aid on bank loans for setting up or expanding existing distilleries. Dual feed distillery projects using multiple feedstocks will also be covered. This amends the existing scheme in which only molasses-based distilleries qualified for loan aid, in a bid to double ethanol production capacity nationwide by 2024. Current nameplate capacity for molasses-based distilleries totals 3.4mn t/yr.

Distilleries must supply at least 75pc of the ethanol produced from the added distillation capacity for fuel blending, rather than industrial or potable use, to secure the government aid.

The scheme will also cover installation of molecular sieve dehydration columns — drying units that increase the purity of ethanol produced through conventional distillation, as well as approved waste water treatment technologies at existing distilleries.

Projects will receive a one-year interest moratorium on loans after which the government will cover four years of interest up to 6pc/yr or 50pc of the rate charged by banks, whichever is lower.

India aims to achieve 10pc fuel ethanol blending with gasoline (E10) by 2022 and E20 by 2030 or earlier. Only 1.4mn t of ethanol was blended during the December 2019-November 2020 ethanol supply year, or around a 5pc ratio, according to the cabinet committee.

By Lauren Moffitt