India amends National Policy on Biofuels - 2018

India amends National Policy on Biofuels – 2018

Amendments to India’s National Policy on Biofuels – 2018 were approved on May 18, 2022 by the Union Cabinet chaired by Prime Minister Shri Narendra Modi.

The key change was to bring forward the deadline for blending 20% ethanol into petrol from 2030 to 2025-26. Currently, around 10% ethanol is blended into petrol.

The “National Policy on Biofuels – 2018” superseded the National Policy on Biofuels, promulgated through the Ministry of New & Renewable Energy in 2009.

During Ethanol Supply Year (ESY) 2021-22, India achieved a 9.90% ethanol blending, consuming 186 crore litres. According to the E20 scenario, India will require 1,016 crore litres of ethanol to achieve this target in 2025-26. Based on current availability, there will be a deficit of approximately 650 crore litres of ethanol.

Thus, India’s oil marketing companies (OMCs)—Bharat Petroleum Corporation Limited (BPCL), Indian Oil Corporation Ltd (IOCL) and Hindustan Petroleum Corporation Limited (HPCL)— entered into a long-term purchase agreement (LTPA) for the upcoming dedicated ethanol plants that will be built across India.

The first set of Tripartite-cum-Escrow Agreement (TPA) was signed on May 10, 2022, among OMCs, project proponents and banks of the respective ethanol plant projects in the presence of Shri Sandeep Poundrik (IAS), principal secretary, Department of Industries, Government of Bihar, Shri Ashwani Bhatia, managing director, State Bank of India, and Shri Sukhmal Jain, executive director, I/C, Marketing Corporate, BPCL.

TPAs 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 Visag Biofuels Private Limited, Madhya Pradesh.

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

The agreement is designed to ensure that payment received by these ethanol plants is utilized for servicing the loan 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 India’s Ethanol Blended Petrol (EBP) Program. Payment towards the supply of ethanol shall be credited to an escrow account maintained with the financing bank to ensure the servicing of the loan as per schedule.