Maharashtra, Uttar Pradesh and Chhattisgarh have emerged as the top three destinations for grain-based ethanol plants attracting over 40 per cent of the total projects approved in the past year after the government announced a scheme for the sector.
So far, 196 projects with a combined capacity to produce 859.11 crore litres of ethanol per annum have been approved by Union Food Ministry since January 2021, a government official said. Maharashtra has got approval for 35 projects having a total capacity of 107.38 crore litres, while Uttar Pradesh received approval for 29 projects with a capacity of 108.74 crore litres and Chhattisgarh has 20 projects with 102.3 crore-litre capacity, the official said.
Nine projects have been approved in Bihar and Odisha, each having a capacity of about 59 crore litres . In West Bengal, eight grain-based plants have been approved with a capacity to produce 67.19 crore litres. While Uttar Pradesh, West Bengal, Chhattisgarh and Odisha are major rice producers, Madhya Pradesh and Bihar are known mainly for maize though paddy is also grown there.
After the new policy, Globus Spirits has started operation in its 85 KLPD Hajipur plant in Bihar and 140 KLPD Panagarh plant in West Bengal, sources said. Karthik Agro’s 65 KLPD Bagalkot plant in Karnataka has also been commissioned. While Gopi Burli of Karthik Agro confirmed the development, Shekhar Swarup of Globus Spirits declined to comment.
Currently, the country has 116 grain-based ethanol plants with an installed capacity of 268 crore litres, of which Punjab has the most –16 plants with a capacity of 61.67 crore litres .
Interest subvention scheme
On December 30, 2020, the Cabinet had approved an interest subvention scheme to set up grain-based distilleries or expansion of existing plants to produce ethanol. But the benefit of the scheme was limited to only stand alone distilleries which use dry milling process. New dual feed distilleries or existing dual-feed plants which looked to expand, as well as those which sought to convert from single feed (molasses/grain) to dual feed were also allowed to avail credit under the scheme.
Under the scheme, the government bears interest subvention for five years including a one-year moratorium against the loan availed from banks at six per cent or 50 per cent of the rate of interest charged by banks, whichever is lower. Interest subvention is available to only those distilleries which agree to supply at least 75 per cent of their ethanol production to oil marketing companies (OMCs) for the ethanol blending programme (EBP).
To achieve the targeted 25 per cent blending with petrol by 2024-25, the country needs 1288 crore litres of ethanol, of which grain-based plants are likely to supply 628 crore litres. With new plants approved, the total capacity of grain-based plants is likely to increase to 1,127 crore litres, according to an industry official.