Ethanol Blending: Indian Oil, HPCL And BPCL Sign Long-Term Purchase Agreement For Upcoming Dedicated Ethanol Plants

The state-run 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.

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, a Petroleum Ministry release said on Wednesday (11 May).

As per the agreement, ethanol produced by these dedicated ethanol plants will be sold to OMCs for blending with petrol as per Centre’s Ethanol Blended Petrol (EBP) programme.

Payment towards supply of ethanol will be credited to escrow account maintained with the financing bank to ensure servicing of 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 Visag Biofuels Private Limited, Madhya Pradesh.

According to the release, In Ethanol Supply Year 2021-22, India achieved 9.90 per cent ethanol blending, consuming 186 crore litre of ethanol, saving over 9000 crore 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, India requires 1,016 crore litre of ethanol to achieve the target in 2025-26. But, there is a deficit of approximately 650 crore litre of ethanol as per the current availability.

These five projects in Madhya Pradesh and Bihar, for which the TPAs were signed on Wednesday, are likely to contribute to around 23 crore litres of ethanol per annum.