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Informist, Wednesday, Sept. 24, 2025

 

NEW DELHI – Bharat Petroleum Corp. Ltd has floated a tender on behalf of state-owned oil marketing companies to procure around 10.5 billion litres of ethanol for the first cycle of the ethanol supply year beginning November. The tender, issued Tuesday, aims to incentivise biofuel production from rice by offering higher rates and mandating a 40% share in grain-based ethanol. 

 

Earlier this month, Joint Secretary (Sugar) Ashwini Srivastava had said that "oil marketing companies are going to put out the tender (for ethanol supply) within this month only." India requires about 12 billion litres of ethanol in 2025-26 to achieve 20% blending in petrol uniformly across the country, the official said.

 

According to the tender, distilleries are required to submit their bids for ethanol supply feedstock-wise and quarter-wise, in kilolitres. The bid is valid till Jul. 31, 2026. The procurement will be carried out by Indian Oil Corp. Ltd, BPCL, Hindustan Petroleum Corp. Ltd., Mangalore Refinery and Petrochemicals Ltd., and Numaligarh Refinery Ltd. 

 

For the upcoming ethanol year, the government has prioritised ethanol production from surplus rice from the Food Corp. of India. Bidders are mandated to ensure that a minimum of 40% of ethanol offered from grain-based feedstocks in the first three quarters of the supply year comes from FCI rice, the tender said. For example, if a supplier bids for 10,000 kilolitres of ethanol from grains for a quarter, at least 4,000 kilolitres must be from FCI rice. "Balance quantity can be offered in any combination of damaged food grains and maize," the tender added.

 

For the fourth quarter, the tender said that "FCI Rice is not permitted for Q4 bidding as current approval for allocation of FCI Rice is valid up to 30.06.2026 only." The first quarter of ethanol supply runs from November to January, and the final quarter runs from August to October. 

 

The maximum allocation of ethanol from FCI rice is capped at 2.34 billion litres for the year. "In line with directives received from Ministry (Ministry of Petroleum and Natural Gas), OMCs (oil marketing companies) need to limit the total allocation of ethanol from FCI Rice in ESY25-26 to 234 Cr. Ltr," the tender said. 

 

To encourage the usage of FCI rice as a feedstock for biofuel production, the government has raised the rate of ethanol made from the FCI rice to INR 60.32 per litre from INR 58.50 per litre for 2025-26. Oil companies will continue to procure ethanol made from other feedstocks at the prevailing rates. 

 

Ethanol made from maize is offered the highest rate of INR 71.86 per litre, and damaged food grain-based ethanol is priced at INR 64.00 per litre. Citing rising production costs, the sugar industry has repeatedly called for higher ethanol prices, but rates have remained mostly unchanged since 2022-23. The rate for ethanol made from C-heavy molasses is INR 57.97 per litre, from sugarcane juice at INR 65.61 per litre, and from B-heavy molasses INR 60.73 per litre. 

 

Industry experts were anticipating a price hike for ethanol made from FCI rice as the government is grappling with piling rice stocks in its godowns. The government has allocated 5.2 million tonnes of rice, in line with the current year, at a heavily subsidised rate. For 2025-26, FCI will sell surplus rice to distillers at INR 2,320 per 100 kg, tad up from INR 2,250 per 100 kg in 2024-25, but well below INR 2,800 per 100 kg in 2023-24. 

 

In addition, the government is running a pilot procurement of 10% broken rice in five states from October to ensure a steady supply channel for distillers. "We have come up with a policy recently that we are increasing the supply of broken rice (for ethanol production) in the open market," Srivastava said at the India Sugar and Bio-Energy Conference earlier this month. 

 

The Centre aims to procure 5.0 million tonnes of 10% broken rice compared with 25% broken rice earlier. Millers can pool the remaining undelivered broken grains and sell them to distillers for ethanol production. Meanwhile, the better-quality 10% broken rice will be offered to meet food requirements. According to industry experts, this initiative will ensure a steady feedstock channel for ethanol production. There is also the "moral guilt" of using the same quality of food grain in food and fuel, G.K. Sood, chairman of MEIR Commodities, said.

 

Oil companies have estimated their quarter-wise procurement requirement at 1.0 billion litres for November, 2.0 billion litres for December–January, 2.8 billion litres for February–April, 2.5 billion litres for May–July, and 2.2 billion litres for August–October. "This ethanol requirement is only indicative," the tender said.  End

 

Reported by Afra Abubacker

Edited by Tanima Banerjee

 

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