BIEPA wants OMCs & Govt to take back ethanol tender; questions methodology

The Bharat Independent Ethanol Producers Association (BIEPA) has urged the Union Ministry of Petroleum and Natural Gas and oil marketing companies (OMCs) to review the ethanol procurement allocation methodology for Ethanol Supply Year (ESY) 2026-27, raising concerns over preferential treatment for long-term offtake agreement (LTOA) holders.

The tender covers approximately 1,100 crore litres of ethanol. According to BIEPA, LTOA holders receive priority for contracted quantities and an additional preference, on a best-endeavour basis, up to their accepted expression of interest (EoI) design capacity. This could leave other eligible manufacturers with residual quantities, even when they offer ethanol at lower prices.

Under the tender, maize-based ethanol is priced at ₹68.86 per litre, including an incentive of ₹2.79, while ethanol produced from damaged food grains (DFG) is priced at ₹64 per litre. Ethanol sourced from surplus rice held by the Food Corporation of India (FCI) is priced at ₹60.32 per litre.

Cost Concerns

The association has questioned the first level of procurement preference under Clause 6.2 of the LTOAs, which prioritises agreement holders over other eligible suppliers, irrespective of price. It argues that such preferential allocation could increase procurement costs for OMCs and the public exchequer when lower-priced ethanol is available from equally qualified producers.

BIEPA President Pushpinder Singh Mamik has said that where compliant ethanol is available at a lower price, procurement should give it due consideration.

BIEPA also highlighted the financial risks facing independent dedicated ethanol plants established under the Government’s Ethanol Blended Petrol Programme. Supported by interest-subvention schemes and bank financing, these facilities often have environmental approvals restricting production to ethanol for blending.

The association warned that inadequate allocations could result in underutilised capacity, difficulties in loan repayment, reduced grain demand from farmers and adverse effects on rural employment.

Demand for Transparent Allocation

BIEPA has sought a review before finalising ESY 2026-27 allocations. Its recommendations include balancing contractual commitments with price competitiveness, clarifying or withdrawing additional preferences, ensuring transparent allocation among LTOA and non-LTOA suppliers, and disclosing the financial implications of preferential procurement.

The association reiterated its support for India’s ethanol-blending targets, emphasising that fair competition and financial sustainability are essential to protecting domestic investments and strengthening the ethanol industry.