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Indian Oil, BPCL, HPCL sign purchase agreement for upcoming ethanol plant

by Rishika Choudhury

Date & Time: May 13, 2022 8:00 AM

Read Time: 2 minute



Highlights:

• OMCs entered into long term agreement
• Government’s target to achieve 20 percent blended ethanol by 2025
• Country requires 1,016 crore litre of ethanol

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.

First set of tripartite was signed among

State Bank of India, Indian Overseas Bank, and Indian Bank are three banks that are involved in the first set of tripartite was signed among OMCs, project proponents, and banks of the respective ethanol plant projects.The agreement is designed to ensure that payment received by ethanol plants is utilised for servicing the finance extended by these banks.

Ethanol produced shall sold to OMCs

As per the agreement, the ethanol produced by the dedicated plants shall be sold to OMCs for blending with petrol as per the governments Ethanol Blending Petrol (EBP) program.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 signed with

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.

Country requires 1,016 crore litre of ethanol

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.

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