DBS Bank extends transition loan of Rs175 crore to Shree Renuka Sugars
Premium- The proceeds will be used to finance the expansion of SRSL’s sustainable bioethanol business in India
Shree Renuka Sugars Ltd (SRSL), a subsidiary of Wilmar International Ltd has obtained a five-year ₹175 crore transition finance facility from DBS Bank, the lender said in a statement on Wednesday.
The proceeds, it said, will be used to finance the expansion of SRSL’s sustainable bioethanol business in India. This is believed to be the first transition loan to be provided by a foreign bank to India’s biofuel manufacturing industry.
According to Platts Analytics, India’s fuel ethanol consumption is estimated to reach nearly 3 billion litres in 2022 and 3.2 billion litres in 2023. This would be an increase from an estimated 2.7 billion litres in 2021, equating to an ethanol blending rate of roughly 6.1%, which translates to displacing 30,973 barrels per day of fossil fuels.
Sunil Ranka, chief financial officer, SRSL, said that bioethanol production is not new to India, but it holds the key for the transition of the energy sector’s reliance on fossil fuels, to more sustainable biofuels which have a lower carbon footprint.
“To provide some perspective, India has an ethanol production capacity of about 849 crore litres today. For India’s targeted 20% blending of ethanol in petrol by 2025, the market will need 1,700-crore litre capacity (80% plant efficiency), and this is where we hope to contribute to the growth of the global biofuel industry by ramping up our bioethanol production capacity to contribute to achieving this ambitious but meaningful target," said Ranka.
According to Niraj Mittal, managing director, and country head of institutional banking group, DBS Bank India, transitioning to bioethanol and other biofuels are expected to play a valuable role in the transition of the power and energy sector towards net zero.
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“These alternative fuel mixes offer the land and marine transport industry a realizable path to achieving decarbonisation, while reducing their dependence on fossil fuels," said Mittal.