India’s Bharat Independent Ethanol Producers Association (BIEPA) has called on the Ministry of Petroleum and Natural Gas and oil marketing companies (OMCs) to reconsider the allocation framework for the Ethanol Supply Year (ESY) 2026–27 tender, arguing that existing rules could disadvantage independent producers and limit price competition.
The tender covers approximately 1,100 crore litres of ethanol. According to BIEPA, producers holding Long-Term Offtake Agreements (LTOAs) receive preference for contracted quantities and an additional allocation preference, on a best-endeavour basis, up to their accepted Expression of Interest (EOI) design capacity. The association argues that this two-stage preference could leave non-LTOA producers competing for residual demand, even when they offer lower-priced ethanol that meets procurement requirements.
BIEPA requested for a review before allocations are finalised. The dispute centres on how procurement rules should balance existing contractual commitments, ethanol prices and equitable access to government-backed demand.
BIEPA Questions Two-Tier Preference in Ethanol Procurement
BIEPA has raised concerns about two provisions affecting LTOA holders under the current allocation framework.
The first relates to Clause 6.2 of LTOAs, which prioritises contracted quantities for agreement holders. BIEPA acknowledges the role of these agreements in providing offtake assurance but questions whether they should also support an additional preference beyond the contracted volumes.
The second concerns Annexure III, Clause B(2)(II)(i)(a), which provides a further preference, on a best-endeavour basis, up to accepted EOI design capacity. The association has sought clarification on the contractual basis for this provision and its application to public procurement.
Pushpinder Singh Mamik, president of BIEPA, argued that procurement should give due consideration to lower-priced ethanol when it meets the necessary quality, regulatory and supply conditions. These are the association’s stated concerns; the supplied reporting does not establish that the allocation framework has been formally ruled discriminatory or that the government has accepted BIEPA’s interpretation.
Ethanol Prices Put Procurement Costs Under Scrutiny
BIEPA has highlighted differences in the tender prices for ethanol made from different feedstocks, questioning whether allocation preferences adequately account for these variations.
The maize price comprises a base price of ₹66.07 per litre and an incentive of ₹2.79 per litre.
The association argues that allocating preference to higher-priced supplies could increase procurement costs for OMCs and the public exchequer when lower-priced, compliant ethanol is available.
However, comparing headline prices alone does not establish the lowest overall procurement cost. Feedstock categories, applicable incentives, supply availability, transportation, quality requirements and contractual obligations can all influence procurement decisions. The reported figures illustrate BIEPA’s concern but are not, by themselves, a complete cost comparison across suppliers.
Independent Ethanol Plants Face Utilisation and Financing Risks
BIEPA has warned that the allocation methodology could affect independent ethanol manufacturers that invested in dedicated production facilities in response to the government’s Ethanol Blended Petrol (EBP) Programme.
According to the association, several facilities were established with support from interest-subvention schemes administered by the Department of Food and Public Distribution and financed through bank borrowings. Some plants also operate under environmental approvals that restrict production to ethanol intended for blending, limiting their ability to redirect output to alternative markets.
If procurement allocations fall short of available production capacity, affected plants could experience lower utilisation, reduced revenues and difficulties servicing debt. The consequences could also extend to farmers supplying grain and workers dependent on ethanol manufacturing facilities. These are risks identified by BIEPA, rather than confirmed outcomes for individual plants.
The dispute follows earlier concerns across India’s ethanol industry over procurement allocations for the 2025–26 supply year. In October 2025, grain-based and sugar-based ethanol industry bodies separately questioned allocation outcomes, highlighting tensions between regional sourcing objectives, existing capacity and access to OMC demand.
Bioenergy Business Analysis
The dispute highlights a structural challenge in India’s ethanol market: aligning long-term investment commitments with competitive procurement as domestic production capacity expands.
LTOAs can provide producers with greater certainty about potential offtake, helping them secure financing and plan operations. At the same time, additional allocation preferences may raise questions about whether non-LTOA suppliers have a meaningful opportunity to compete, particularly when their products meet required specifications at lower prices.
The central policy question is how to balance contractual certainty, price competitiveness, regional supply requirements and the utilisation of existing production assets. Removing preferences without considering valid contractual commitments could undermine confidence among investors who relied on established arrangements. Conversely, extending preferences beyond contracted quantities without a clearly explained rationale could constrain competition and leave some eligible facilities underused.
The next development to watch is whether the Ministry of Petroleum and Natural Gas or OMCs revise or clarify the ESY 2026–27 allocation framework before finalising procurement. Until an official response or revised tender documentation becomes available, BIEPA’s proposals should be understood as an industry association’s request for policy review, not an announced change in government policy.
