Raipur, Dec 30 (PTI) Bhoramdeo Sahakari Sakhar Utpadak Karkhana Maryadit (BSSUK), a cooperative sugar mill in Chhattisgarh, has signed a pact with NKJ Biofuel Ltd to set up an ethanol production unit on a public-private partnership (PPP) basis in the state's Kabirdham district, a public relations department official said on Wednesday.

As per the agreement, NKJ Biofuel Ltd, a subsidiary of Chhattisgarh Distilleries Ltd, will carry out ethanol production using sugarcane juice and molasses, a byproduct of sugar mill, for a period of 30 years, it said.

The contract was signed between BSSUK and NKJ Biofuel on Tuesday in the presence of Chief Minister Bhupesh Baghel here at his official residence, the official said.

BSSUK Managing Director Bhupendra Thakur and Chhattisgarh Distilleries' Aranya Kedia signed the memorandum of understanding.

Speaking on the occasion, Baghel said it will be the country's first such plant to be set up on a PPP model.

It will generate direct and indirect employment opportunities in the region and will form the basis for economic prosperity.

Chhattisgarh has kept the issues related to farmers and their development on priority, he said.

The ethanol plant will not only help in ensuring better returns to sugarcane cultivators but will also prove to be beneficial for the sugar factory, the chief minister added.

Over Rs 100 crore will be invested on setting up the plant with a capacity of 40 kilolitre per day, the official said.

During the sugarcane crushing season, its juice will be used as raw material for ethanol production while during the off season, molasses will be used, he added.