‘350+ distilleries face uncertainty over ethanol allocation under new tender’

NEW DELHI: More than 350 operational distilleries across the country are facing an uncertain future due to inadequate procurement orders under the latest ethanol tender, with industry bodies flagging concerns over the allocation methodology that favours new entrants over existing units.

The Ethanol Supply Year (ESY) 2025-26 tender issued by Oil Marketing Companies (OMCs) has come under fire from stakeholders who allege that the allocation criteria is creating artificial imbalances, while sidelining distilleries set up under prior government commitments.

According to the tender document (#1000442332), zones where offers from local distilleries fall short of requirements are classified as deficit zones, with all local offers considered full for allocation.

However, industry representatives say this approach ignores surplus capacity in neighbouring states, much of which was established under Long-Term Offtake Agreements (LTOA) and Expression of Interest initiatives promoted by OMCs themselves.

“A more holistic procurement model is needed -- one that considers surplus availability across states, pre-existing capacities and investments, prior understandings and commitments made with distilleries,” Grain Ethanol Manufacturers Association (GEMA) President C K Jain said in a statement. The current allocation mechanism is not only economically inefficient but also environmentally counterintuitive as it promotes the creation of redundant capacity while neglecting existing infrastructure, he added.