BIEPA asks govt, OMCs to review ethanol supply tender allocation methodology

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The association has raised concerns that long-term offtake agreement holders receive priority for contracted quantities and an additional preference, on a best-endeavour basis

By BL Mangaluru Bureau

Updated - October 23, 2026 at 11:44 AM. | Mangaluru, October 23

(representative image)

The Bharat Independent Ethanol Producers Association (BIEPA), representing independent dedicated ethanol manufacturers across India, has urged the Union Ministry of Petroleum and Natural Gas and the oil marketing companies (OMCs) to review the allocation methodology for the Ethanol Supply Year (ESY) 2026-27 tender, citing concerns over the double preference extended to long-term offtake agreement (LTOA) holders.

The tender covers approximately 1,100 crore litres of ethanol. BIEPA has raised concerns that 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 producers with only the remaining quantities, even when they offer ethanol at lower prices.

The tender prices maize-based ethanol at ₹68.86 per litre (₹66.07 plus an incentive of ₹2.79), while ethanol from damaged food grains (DFG) is priced at ₹64.00 per litre, and for ethanol from FCI surplus rice at ₹60.32 per litre.

In a media statement, BIEPA has raised concerns over the first level of procurement preference under Clause 6.2 of the LTOAs, which prioritises allocations to LTOA holders over other eligible suppliers, irrespective of price. The association contends that while such agreements may provide for offtake commitments on a ‘best endeavour’ basis, they should not justify preferential procurement of higher-priced ethanol when lower-priced alternatives are available from equally qualified manufacturers. Such allocations, it argues, will result in avoidable additional expenditure for OMCs and, consequently, the exchequer and the public.

‘Consider lowest bidders’

Quoting Pushpinder Singh Mamik, President of BIEPA, the statement said: “Long-term agreements were meant to assure quantity on a best endeavour basis. Where compliant ethanol is available at a lower price, we believe procurement should give it due consideration.”

BIEPA said that many independent dedicated ethanol plants were established in response to the Government’s Ethanol Blended Petrol Programme, supported by interest-subvention schemes of the Department of Food and Public Distribution and substantial bank financing. They were accorded environmental approvals restricting them to producing ethanol for blending, limiting their ability to divert output to alternative markets.

BIEPA warns that the allocation framework could leave these plants underutilised, create difficulties in servicing bank loans and affect farmers supplying grain and the rural employment supported by these facilities, the statement said.

“Independent ethanol producers invested in capacity in response to government policy. Leaving these units with only residual quantities could put their investments and the loans behind them at risk. We seek a level-playing field where every eligible producer has a fair opportunity to supply and public procurement delivers value for the public,” Mamik said.

Reiterating commitment

BIEPA has urged the ministry and OMCs to review the methodology before ESY 2026-27 allocations are finalised. Its demands include considering price alongside contractual commitments, withdrawing the additional preference or clarifying its contractual basis, ensuring transparent and equitable allocation among eligible LTOA and non-LTOA suppliers, disclosing the financial implications of preferential allocation, and making necessary amendments before finalisation.

BIEPA reiterated its commitment to the Government’s ethanol blending objectives, emphasising that a financially sustainable and competitive domestic ethanol industry is essential to protecting investments made in support of the programme.

Published on October 23, 2026

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