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HomeAllied IndustryBiofuel industryLeading oil PSUs sign tripartite-cum-escrow agreement for upcoming dedicated ethanol plants

Leading oil PSUs sign tripartite-cum-escrow agreement for upcoming dedicated ethanol plants

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The agreement is designed to ensure that payment received by ethanol plants is utilised for servicing the finance extended by these banks

The Oil Marketing Companies (OMCs) – Bharat Petroleum Corporation Limited (BPCL), Indian Oil Corporation Ltd (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) was signed among OMCs, project proponents and banks of the respective ethanol plant projects in presence of Sandeep Poundrik (IAS), Principal Secretary, Department of Industries, Government of Bihar, Ashwani Bhatia, MD State Bank of India and Sukhmal Jain, Executive Director I/C, Marketing Corporate, BPCL.

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 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 Govt of India’s Ethanol Blended Petrol (EBP) Program. Payment towards the supply of ethanol shall be credited to the escrow account maintained with the financing bank to ensure servicing of the loan as per schedule. TPAs were signed with Micromax Biofuels, Bihar, Eastern India Biofuels, Bihar, Muzaffarpur Biofuels, Bihar, K P Biofuels, Madhya Pradesh and Visag Biofuels, Madhya Pradesh.

In Ethanol Supply Year 2021-22, India achieved 9.9 per cent ethanol blending, consuming 186 crore litre of ethanol, saving over Rs 9000 crores of foreign exchange. However, the government has advanced the target of achieving 20 per cent blended ethanol by 2025, which is commonly known as E20 target. The major challenge is the deficit of ethanol to achieve this target. As per E20 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 us a cleaner environment as it produces 38 per cent lesser carbon dioxide emission, as well as, supports the rural economy with investment in rural areas and employment generation.

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