OMC ethanol tender explained: ESY 2026–27 prices, feedstocks and allocation

India’s OMC ethanol tender for ESY 2026–27 seeks around 1,100 crore litres of denatured anhydrous ethanol for supply to oil marketing company locations between 1 November 2026 and 31 October 2027.

The joint procurement involves Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), Hindustan Petroleum Corporation Limited (HPCL), Mangalore Refinery and Petrochemicals Limited (MRPL), and Numaligarh Refinery Limited (NRL).

Issued through BPCL, the quantity-bid document dated 16 October 2026 sets out eligible feedstocks, ethanol procurement prices, quarterly requirements, allocation preferences and supplier obligations.

A significant provision is the exclusion of offers for ethanol produced from sugarcane juice, sugar, sugar syrup and B-heavy molasses. However, C-heavy molasses remains eligible, alongside specified grain-based and other permitted feedstocks.

Understanding the tender requires looking beyond its headline volume. A supplier’s production capacity does not automatically translate into an allocation, and an allocation does not mean the ethanol has already been delivered.

This explainer examines the ESY 2026–27 terms and explains how OMC ethanol procurement works. For the initial announcement, read our report on the ESY 2026–27 ethanol tender and feedstock restrictions.

This article reflects the original tender dated 16 October 2026. Subsequent corrigenda, government directions and applicable court orders may change individual provisions.

OMC ethanol tender ESY 2026–27: Key details

Bidders should confirm the applicable pre-bid session, submission deadline and any amendments on the official portal.

What is an OMC ethanol tender?

An OMC ethanol tender is a procurement process through which oil marketing companies invite eligible suppliers to offer ethanol for delivery to designated locations.

The ethanol is used under India’s Ethanol Blended Petrol programme, or EBP programme. E20 refers to petrol containing 20% ethanol by volume.

This tender invites quantity bids: registered vendors offer the quantities they can supply against the prescribed conditions and feedstock-specific procurement rates. It should not be confused with an unrestricted auction in which every bidder independently proposes an ethanol selling price.

Procurement must match production with demand at particular receiving locations and during particular periods.

The process broadly involves:

1. Submission of eligible quarterly quantity offers.
2. Evaluation against tender conditions and approved capacity.
3. Allocation under the prescribed methodology.
4. Issuance and acceptance of award and contractual documents.
5. Scheduled deliveries, quality checks and payment.

Each stage has a different meaning. Submitting an eligible offer does not guarantee an order.

What does ESY mean?

ESY stands for Ethanol Supply Year.

For this tender, ESY 2026–27 runs from 1 November 2026 to 31 October 2027. It differs from the calendar year and India’s April–March financial year.

The indicative requirement is divided into four quarters:

OMCs reserve the right to revise requirements during the supply year.

How much is 1,100 crore litres?

The headline requirement equals 11 billion litres, or 11 million KL.

One KL equals 1,000 litres. This distinction matters because procurement requirements are often reported in crore litres, while vendors submit offers in KL.

The 1,100 crore-litre figure is an indicative requirement—not a confirmed total of awarded contracts or completed supplies.

Which feedstocks are eligible?

The original quantity-bid document identifies the following categories:

Examples listed within the “other feedstocks” category include sugar beet, sweet sorghum, cassava, rotten potatoes and specified agro-food or pulp industry waste, subject to applicable permissions.

This category is not a route to offer an excluded feedstock. It excludes the separately listed feedstocks and those prohibited by government directions.

Suppliers must hold valid Consent to Operate (CTO) approval for the relevant feedstock group on the date of bid submission.

Why are sugarcane juice and B-heavy molasses excluded?

Annexure I states that the Government of India has directed that sugar diversion for ethanol be reduced to zero for ESY 2026–27.

Accordingly, offers are not sought for ethanol produced from sugarcane juice, sugar, sugar syrup or B-heavy molasses.

C-heavy molasses remains eligible. It is a residual stream after further sugar extraction, making its position different from directly diverting juice or other sugar-bearing streams.

The precise distinction matters: the tender does not exclude every sugar-industry feedstock.

These are the stated procurement conditions for this tender. They should not be presented as a permanent rule for every future supply year or every ethanol market.

Ethanol procurement prices for ESY 2026–27

Annexure II lists the following basic rates and maize incentive:

Transportation charges and applicable GST are additional. The document lists 5% GST for ethanol under HSN code 2207.

The tender also states that government directions concerning these rates must be honoured.

What is the maize ethanol price?

The listed maize price comprises:

₹66.07/litre basic rate + ₹2.79/litre incentive = ₹68.86/litre, before transportation and GST.

Quoting ₹66.07 alone would omit the listed incentive.

However, the selling price does not establish producer profitability. Margins depend on feedstock procurement, plant efficiency, energy, financing, logistics and co-product revenues.

Basic rate versus ex-mill price

The tender defines the basic rate as the feedstock-specific price excluding incentives, transportation and GST.

The ex-mill price includes an applicable incentive over the basic rate.

This distinction matters because the allocation methodology uses ex-mill prices at specified stages.

What are the FCI rice rules?

The tender states that 72 lakh metric tonnes of surplus rice procured from the Food Corporation of India, corresponding to 324 crore litres of ethanol, has been allocated for the EBP programme until 30 June 2027.

It limits allocation of ethanol from this feedstock to:

Offers from FCI surplus rice are not permitted for Q4.

There is an important timing distinction: Q3 extends through July, while the stated rice authorisation runs until 30 June 2027. The quarterly ceiling should not be read as independently extending that authorisation.

Suppliers must also undertake that rice procured from FCI for this purpose will be used exclusively for ethanol supplied to OMCs, rather than diverted to other uses.

Who can bid, and how much can suppliers offer?

The quantity bid is open to registered vendors, subject to the prescribed eligibility conditions.

Offers must remain within the distillery’s applicable CTO production capacity. The tender assesses capacity using the lower of intended operating days and the maximum days specified for each quarter:

For example, a distillery with a CTO capacity of 100 KL/day, intending to operate for at least 83 days in Q1, could offer up to:

100 × 83 = 8,300 KL.

If its intended operation is only 70 days, the corresponding ceiling would be 7,000 KL.

This determines an offer ceiling under the stated assumptions. It does not guarantee allocation.

The minimum quantity offered is 120 KL against any feedstock in a quarter.

The tender also provides a declaration-based extension to 31 October 2027 for the specified vendor registrations previously valid until 30 November 2025 or 31 August 2026, subject to usual compliance.

Can traders supply purchased ethanol?

The tender requires offered quantities to be produced from indigenous feedstocks at the supplier’s own registered or approved distilleries.

Its own-production declaration prohibits purchasing or sourcing third-party ethanol for onward supply to the OMCs.

How does ethanol allocation work?

Allocation is conducted separately for each quarter.

Where total eligible offers are below the quarterly requirement, all eligible offers are considered for allocation.

Where eligible offers exceed requirements, the methodology applies preferences and feedstock-price sequencing.

Initial allocation preferences

The tender provides preference, up to the quarter’s requirement, to:

• Cooperative sugar mills registered under the National Federation of Cooperative Sugar Factories Limited.
• Dedicated Ethanol Plants (DEPs) holding valid Long-Term Offtake Agreements, subject to the stated registration, participation and commissioning requirements.

For qualifying DEPs, this stage refers to the annual offtake quantity specified in Clause 6.2 of the relevant agreement. DEP allocation at this stage is on a lowest ex-mill price basis.

Allocation of the balance requirement

Remaining eligible offers are considered in ascending order of feedstock-category ex-mill price.

Within the relevant category, DEPs under the specified EOI-1 arrangement receive a further preference on a best-endeavour basis, subject to the stated conditions and accepted design capacity.

Remaining demand is allocated proportionately according to bidders’ balance eligible offers. The process moves to higher-priced feedstock categories if required.

Location-wise allocation

The document specifies optimisation using linear programming, with conditions including:

Uttar Pradesh is considered independently at the quantity-acceptance stage because of the excise restrictions described in the document. Excess eligible offers from suppliers in the state may be allocated outside it under the methodology.

The practical implication is that capacity, eligibility, feedstock category, preferences and location requirements all influence allocation.

Does the best-endeavour preference guarantee offtake?

The tender expressly states that its best-endeavour preference is not a guarantee of offtake.

It does not require OMCs to procure beyond their requirements or on prices and terms different from those prescribed.

It also states that participation, a previous allocation or supply in an earlier year does not create an entitlement to a particular quantity under this tender.

Installed capacity should therefore be distinguished from secured sales.

How are transportation charges calculated?

Transportation is payable separately under a distance-based schedule.

The tender uses the one-way distance between the distillery out-gate and relevant OMC in-gate, determined through the specified Google API process. The rates account for loaded movement and empty return.

For example, the original rate for an applicable 150 km distance is:

₹333 + (₹2.36 × 150) = ₹687/KL, or ₹0.687/litre.

The schedule provides for quarterly review where diesel-price changes meet the specified minimum 2% threshold. Actual payments remain subject to the applicable schedule and revisions.

What are the payment and security deposit terms?

The tender-specific payment clause provides for 100% payment, subject to applicable deductions, within 21 days of receipt at the designated site and submission of original invoices, following the relevant OMC’s procedures.

It is not a promise of payment within 21 days of dispatch alone.

The stated security deposit is 3% of the basic LOA value, expressed in the document as:

Ex-mill price × LOA quantity × 3%.

The prescribed bank-guarantee or invoice-retention arrangements apply. The document requires the security arrangement within 10 days of LOA issuance and also specifies submission of the signed agreement within 10 days.

For current-year bank guarantees, the stated validity is until 30 November 2027, with a claim period until 31 May 2028.

What happens if supplies fall short?

The Price Reduction Clause (PRC) provides for a reduction of 3% of the ex-mill price on the eligible shortfall quantity when prescribed performance is not achieved.

The calculation involves monthly indents, prorated purchase orders, quarterly reconciliation, tolerances and specified adjustments.

It should not be described as an automatic 3% deduction from the entire contract value.

The tender also includes risk-purchase provisions. In specified circumstances, OMCs may curtail or cancel orders and procure from other sources at the supplier’s risk and cost.

Suppliers consequently need to track contractual quantities, accepted indents, deliveries and reconciliations carefully.

Can allocations or feedstocks change?

The tender provides several forms of operational flexibility, subject to its conditions.

Diversion: OMCs may redirect allocated or balance quantities to other locations. Suppliers are required to commence supplies to a diverted location within seven days of the revised purchase order.

Additional procurement: An individual OMC may, by mutual consent, procure up to 10% above the relevant allocated quantity. Where the calculated quantity is below 500 KL, the provision permits procurement up to 500 KL.

Feedstock conversion: Where OMCs accept a supplier’s conversion request, the payable ex-mill price is the lower of the originally allocated and proposed feedstock prices.

Change of distillery: Substitution may be permitted for the specified company, group or cooperative arrangements, subject to registration, documentation and OMC approval.

These provisions are conditional permissions, rather than automatic supplier entitlements.

What quality and certification requirements apply?

The tender requires compliance with its industry specifications based on IS 15464:2022 and applicable BIS revisions.

The specification table lists a minimum ethanol content of 99.6% by volume, including denaturant. The supply provisions also require total chloride below 3 mg/kg, or as prescribed by BIS.

Quality compliance covers the complete specification, rather than ethanol concentration alone.

Key requirements include:

• A batch-linked quality certificate or test report accompanying deliveries.
• Testing against applicable specifications.
• Dedicated ethanol tank trucks and prescribed transport compliance.
• Feedstock certification linked to the invoice or the accepted certification arrangement.
• Mandatory feedstock self-declarations for C-heavy molasses and the “other feedstocks” category.

Non-conforming product must be taken back under the tender’s conditions at the supplier’s cost and risk.

The Integrated Ethanol Management System (IEMS) supports vendor activities including vehicle information, supply management and reconciliation.

What does the tender mean for the ethanol industry?

The following are implications of the procurement structure, rather than confirmed allocation outcomes.

Feedstock flexibility matters

The exclusion of juice, sugar, syrup and B-heavy molasses changes the eligible supply mix.

However, a restriction on some feedstocks does not automatically guarantee additional allocation to every supplier using an eligible alternative.

Price and allocation must be assessed together

Maize has the highest listed price among the specified categories after its incentive is included. Yet the balance-allocation process considers feedstock categories in ascending ex-mill price order.

A higher procurement price therefore does not independently establish stronger allocation prospects.

Annual capacity is only part of the picture

Quarterly requirements, feedstock permissions, operating availability and receiving-location needs affect actual procurement.

For assessing commercial performance, allocations and completed deliveries matter alongside installed capacity.

Why are allocations provisional?

The tender refers to pending judicial proceedings concerning ethanol allocation methodology.

It states that allocations, Letters of Award, purchase orders and revisions remain subject to applicable interim directions and final judicial outcomes.

The document reserves rights to revise, reallocate, reduce, withdraw, modify or cancel quantities in the stated circumstances.

This explainer reports those tender conditions; it does not independently establish the current outcome of the proceedings.

Frequently asked questions

Source and update policy

Primary source: Joint OMC ethanol quantity-bid document dated 16 October 2026, issued through BPCL, Tender ID 26985, reference 1000466894 (C-1).

This explainer draws principally on Annexures I–VII, covering eligibility, prices, allocation, commercial terms, delivery, feedstock certification and IEMS obligations.

Year-specific prices, deadlines and permissions should be read with subsequent corrigenda. The original tender and applicable official directions take precedence over this summary.