State-run oil marketing companies (OMCs) have excluded ethanol produced from sugarcane juice, sugar syrup and B-heavy molasses from their latest procurement tender for the 2026-27 supply year, as the government seeks to balance its petrol-blending targets with the need to maintain adequate domestic sugar availability.
A tender was issued on October 16 by Bharat Petroleum Corporation Ltd (BPCL) on behalf of oil marketing companies (OMCs), seeks bids for around 11 billion litres of ethanol for the supply year beginning November to meet the requirement of doping 20 per cent ethanol in petrol.
“The Government of India has issued directions that sugar diversion for ethanol be reduced to zero for ethanol supply year 2026-27,” the tender document said.
It also cuts the incentive for maize-based ethanol, lowering the procurement price to Rs 68.86 per litre from Rs 71.86.
“No offers have been sought for ethanol produced from sugarcane juice, sugar or sugar syrup and B-heavy molasses in this quantity bid tender,” it added.
The restrictions mark a shift in feedstock sourcing for the ethanol-blended petrol programme, which has relied on both grain-based and sugarcane-based ethanol to reduce crude oil imports and cut vehicle emissions.
Notably, the reduction in the maize incentive to Rs 2.79 per litre from Rs 5.79 is expected to lower returns for producers supplying ethanol from the grain. This comes even as the exclusion of sugar-based feedstocks increases the importance of alternative raw materials.
Ethanol is produced from agricultural feedstocks, including sugarcane and grains, and blended with petrol to displace a portion of fossil fuel consumption. The programme has created a substantial market for domestic distilleries while offering farmers an additional source of demand for agricultural produce.
The decision comes amid concerns over sugar supplies and rising prices as the poor rainfall in Maharashtra and Karnataka, two key sugar-producing states, has raised the risk of lower sugar output.
(with inputs from PTI)
