Leading Public Sector Indian Oil Marketing Companies on Wednesday signed a historic tripartite-cum-Escrow Agreement for upcoming dedicated ethanol plants across India.
Bharat Petroleum Corporation Limited (BPCL), Indian Oil Corporation Ltd (IOCL), and Hindustan Petroleum Corporation Limited (HPCL) entered into a long-term purchase agreement (LTPA).
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, Govt. of Bihar, Ashwani Bhatia, MD State Bank of India and Shri Sukhmal Jain, Executive Director I/C, Marketing Corporate, BPCL.
Banks involved in the Tripartite Agreement
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 utilized 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 an escrow account maintained with the financing bank to ensure servicing of the loan as per schedule.
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.
Ethanol Blending targets in India
In Ethanol Supply Year 2021-22, India achieved 9.90% ethanol blending, consuming 186 Cr. Ltr of ethanol, saving over 9000 Crores of foreign exchange.
However, the Government has advanced the target of achieving 20% blended ethanol by 2025, which is commonly known as the E20 target.
The major challenge is the deficit of ethanol to achieve this target. As per the E20 scenario, the country requires 1,016 crore liters 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 liters of ethanol per annum.
Ethanol blended petrol not only gives us a cleaner environment as it produces 38 % lesser carbon dioxide emission, as well as, supports the rural economy with investment in rural areas and employment generation.