India Mandates Ethanol Blending

NEW DELHI - Dec 4/06 - SNS -- Ethanol production in India is expected to reach 550 million liters this year, representing a significant increase in output from previous years, when there was no policy about the use of ethanol in automotive fuel.

India now wants 5% ethanol to be blended with petrol. At the same time, concessional loans are provided from Sugar Development Fund (SDF) to the sugar factories to establish facilities for production of ethanol.

The Sugar Development Fund Rules, 1983, provide for sanction of financial assistance to sugar mills for setting up of plants for production of ethanol from molasses/alcohol at concessional rate of interest i.e. 2% below the Bank Rate, which effectively comes to 4% per annum at present. The sugar mill is eligible for SDF loan up to 40% of the eligible project cost which is to be repaid in eight half yearly equal instalments after one year from disbursement.

The Government has decided to blend 5% ethanol with petrol with effect from November, 2006. The percentage of blending has been planned to be increased to 10% in Phase-II, which is expected to generate a demand of about 1200 million liters after one year or so.

This was stated here today by Dr. Akhilesh Prasad Singh, Minister of State for Consumer Affairs, Food and Public Distribution and Agriculture in reply to a question in Lok Sabha.