Pradhan Mantri Ji-Van Yojana

Reduction in dependence on imported crude oil is essential for the economic and environmental well-being of the country. The government of India has been promoting the production and usage of biofuels like ethanol-blended petrol. Current levels of bioethanol production fall short of the amount required to achieve the government’s target of 10% blending by 2021-22. The Pradhan Mantri Ji-Van Yojana has been launched to encourage commercial-scale production of bioethanol. The scheme’s sole focus is on Second Generation (2G) bioethanol that is produced from non-edible agricultural by-products and organic waste. The capital cost and the conversion cost of 2G ethanol are much higher than the conventional molasses method. The Pradhan Mantri Ji-Van Yojana offers financial assistance to companies for setting up 2G ethanol biorefineries.

Advantages of 2G Ethanol Biorefineries

Along with cellulosic ethanol, 2G ethanol biorefineries have other avenues of profitable production. These refineries may also produce the following products from surplus lignin:

High-value chemicals like Xylitol, L-Arabinose, Furfural and high-fructose syrup
Liquid Carbon dioxide or dry ice
High-quality compost
Biogas and pellets

Objectives of the Scheme

Major objects of the Pradhan Mantri Ji-Van Yojana are to:

Encourage commercially viable 2G bioethanol production
Offer supplementary income to farmers by transforming their agricultural by-products into raw material for refineries
Reduce air pollution caused by activities like stubble burning to get rid of agricultural waste
Contribute to the government’s Ethanol Blended Petrol (EBP) programme to reduce imported oil dependence by 10%
Create direct and indirect employment opportunities
Help in better waste management by using biodegradable waste as raw material
Encourage and indigenous innovative biomass to ethanol conversion techniques

Projects Supported

The Pradhan mantra Ji-Van Yojana supports setting up bioethanol projects of two kinds:
- Commercial-scale projects to produce commercially viable quantities of bioethanol for blending
- Demonstration scale projects to encourage technology providers to make newer methods of bioethanol production viable

This scheme establishes12 commercial scale and 10 demonstration-scale 2G bioethanol refineries so far.

For this purpose, it has a total outlay of Rs.1969.5 crores.
The scheme will be implemented in two phases:
- The first phase will cover 6 commercial projects and 5 demonstration projects from 2018-19 to 2022-23.
- The second phase will cover the rest of the projects from 2020-21 to 2023-24.

Nodal Agencies

The nodal agency for recommending eligible projects for the scheme is the Scientific Advisory Committee (SAC) of the Ministry of Petroleum and Natural Gas (MoPNG). For implementation purposes and offering secretarial support to SAC, the Centre for High Technology (CHT), another body under MoPNG has been designated as the nodal agency.

Application and Scheme Implementation

The implementing agency, CHT, shall invite proposals online and offline for project development under the Pradhan Mantri Ji-Van Scheme.
Entities interested in setting up refineries under the scheme must submit proposals and relevant documents, subject to meeting certain eligibility criteria.
The other nodal agency, SAC, will appraise the proposals based on some selection criteria and recommend the project if fit for a financial grant
After a recommendation, a verification process is done, and the financial assistance will be sanctioned.
Based on the progress of the project, funds will be released in multiple phases.
Once production begins, the commercial projects must supply the entire quantity of 2G bioethanol to Oil Marketing Companies (OMCs) for the purpose of blending.
After two years, the MoPNG will review the project and if satisfied, will deem it ‘successful’.

Eligibility Criteria

Companies applying for a grant under the Pradhan Mantri Ji-Van yojana must possess experience in at least one of the following activities in order to be considered.

Crude oil refining
Chemical/petrochemical production or handling
Marketing fossil fuels/biofuel blended fossil fuels
Handling large amounts of biomass waste

Apart from these companies, the following entities may also apply for:

Technology licensor with the technique of 2G ethanol production
State or central government departments
Public Sector Undertakings (PSUs)
Local civic bodies addressing environmental issues
Registered research & educational institutions may apply for demonstration-scale projects alone

Following types of companies are not eligible for assistance under the scheme:

Declared wilful defaulters by RBI
Declared non-cooperative borrowers by RBI
Companies which have availed one-time settlement

Other Salient Features

Companies may choose to include working capital under the total project cost.
SAC retains discretion to fix selection criteria or other conditions for appraisal of proposals.
Grants, when released, shall be routed through the CHT which is responsible for maintaining legal formalities and guarantees.
Project developers must enter into an EPA (Ethanol Purchase Agreement) with OMCs, assuring the procurement of 2G bioethanol.
Proposals must be based on ethanol price determined from time to time by the government.
Demonstration scale projects must function on a minimum of 50% of their nameplate capacity for cumulative or continuous three months of a year, for five years.
Projects approved cannot be sold to any third party without obtaining the prior consent of the government.

Quantum of Assistance

For commercial-scale projects, the Viability Gap Funding (VGF) available under the Ji-Van yojana is up to 20% of the total cost or Rs.5 crores per 10 lakh litres of the refinery’s nameplate capacity, whichever is lesser. Total funding allowed per project is capped at Rs.150 crores.

Fund release pattern:

Project status	Fund release
Installation of equipment	25%
Mechanical erection	25%
Achieving 25% of annual production capacity	25%
Achieving 75% of annual production capacity	25%

For demonstration scale projects, the funding available is a maximum of Rs.15 crores for each technology. The companies may also receive additional funds amounting to another 20% of the total cost from PSUs and other government agencies.

Documents Required

When submitting their proposals for projects under Pradhan Mantri Ji-Van yojana, companies must also attach relevant documents such as:

Detailed feasibility report, representing the cost for various aspects of the project
Biomass and water assessment report
Supply chain and logistics report
Biomass assessment report
Technology licensing agreement
Document proving land ownership
Document establishing a source of enzymes
Technology trials report (For demonstration scale, companies may furnish lab results)
Life cycle analysis (LCA) report of proposed technology (only for commercial-scale)
Engineering, Procurement and Construction Management (EPCM) contract and OBE with the reputed organisation (Preference for companies with contractors operating in India, so that local sourcing can be arranged)
Three-year contract, renewable for two more years, for O&M (Operation & Maintenance) with the vendor or technology provider
Three-year contract, renewable for two more years, with biomass supplier for uninterrupted flow of biomass