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Indian Oil, BPCL, HPCL sign purchase agreement for upcoming dedicated ethanol plants

The government has advanced the target of achieving 20 percent blended ethanol by 2025.

May 12, 2022 / 08:17 AM IST
A bioethanol plant (representative image: Wikimedia Commons)

A bioethanol plant (representative image: Wikimedia Commons)

State-run oil marketing companies (OMCs) – Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) – have entered into a long-term purchase agreement for upcoming dedicated ethanol plants across India, the Ministry of Petroleum & Natural Gas said on May 11.

The first set of tripartite was signed among OMCs, project proponents, and banks of the respective ethanol plant projects.

State Bank of India, Indian Overseas Bank, and Indian Bank are three banks that are involved in this tripartite agreement with OMCs and project proponents.

The agreement is designed to ensure that payment received by ethanol plants is utilised 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 the government's Ethanol Blended Petrol (EBP) program.

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Payment towards the supply of ethanol shall be credited to an escrow account maintained with the financing bank to ensure servicing of the loan as per schedule.

The agreements were signed with Micromax Biofuels Pvt Ltd, Bihar, Eastern India Biofuels Pvt Ltd, Bihar, Muzaffarpur Biofuels Pvt Ltd, Bihar, K P Biofuels Pvt. Ltd, Madhya Pradesh, and Vizag Biofuels Private Limited, Madhya Pradesh.

"In 2021-22, India achieved 9.90 percent ethanol blending, consuming 186 crore litre of ethanol, saving over 9,000 crore of foreign exchange," the ministry said.

Explained | How India’s ethanol-blending plan impacts industry

The government has advanced the target of achieving 20 percent blended ethanol by 2025. The country requires 1,016 crore litre of ethanol to achieve the target in 2025-26. But, there is a deficit of approx. 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 produces 38 percent less carbon dioxide emission.

The event was attended by Sandeep Poundrik (IAS), Principal Secretary, Department of Industries, Ashwani Bhatia, MD State Bank of India and Sukhmal Jain, BPCL.



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first published: May 12, 2022 08:17 am
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