These Oil PSUs join hands for upcoming dedicated ethanol plants

New Delhi: The oil marketing companies (OMCs) namely – Bharat Petroleum Corporation Limited (BPCL), Indian Oil Corporation Limited (IOCL) and Hindustan Petroleum Corporation Limited (HPCL) have entered into a long-term purchase agreement (LTPA) for upcoming dedicated ethanol plants across India. The first set of Tripartite-cum-Escrow Agreement (TPA) has been signed among OMCs, project proponents and banks of the respective ethanol plant projects in presence of the Department of Industries, Govt. of Bihar's Principal Secretary Sandeep Poundrik (IAS), State Bank of India (SBI) Managing Director Ashwani Bhatia and BPCL's Executive Director (Marketing Corporate) Sukhmal Jain.

State Bank of India, Indian Overseas Bank and Indian Bank are three banks who are involved in this tripartite agreement with OMCs and project proponents. The agreement is designed to ensure that payment received by Ethanol plants is utilized for servicing the finance extended by these Banks. As per the agreement, ethanol produced by these dedicated ethanol plants shall be sold to OMCs for blending with Petrol as per Govt of India's Ethanol Blended Petrol (EBP) Program.

Payment towards the supply of ethanol shall be credited to escrow account maintained with the financing bank to ensure servicing of loan as per schedule. TPAs were signed with Micromax Biofuels Pvt Ltd, Bihar, Eastern India Biofuels Pvt Ltd, Bihar, Muzaffarpur Biofuels Pvt Ltd, Bihar, KP Biofuels Pvt Ltd, Madhya Pradesh and Visag Biofuels Private Limited, Madhya Pradesh.

In ethanol supply year 2021-22, India achieved 9.90 percent ethanol blending, consuming 186 crore leter of ethanol, saving over 9,000 crores of foreign exchange. However, the government has advanced the target of achieving 20 percent blended ethanol by 2025, which is commonly known as E-20 target. The major challenge is the deficit of ethanol to achieve this target. As per E-20 scenario, the country requires 1,016 crore litre of ethanol to achieve the target in 2025-26. But, there is a deficit of approx. Rs 650 crore of ethanol as per the current availability. These five projects are likely to contribute to around 23 crore litres of ethanol per annum.

Ethanol blended petrol not only gives the cleaner environment as it produces 38 percent lesser carbon dioxide emission, as well as, supports the rural economy with investment in rural areas and employment generation.

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