OMCs Issue Tender for 124 Crore Litres of Ethanol from Rice and C Heavy Molasses for 2024-25
India’s oil marketing companies (OMCs) have issued a tender for the procurement of 124 crore litres of ethanol for the current ethanol supply year (ESY) 2024-25. This tender, which is part of Cycle 3 (C3) of the ESY, targets ethanol produced specifically from subsidised rice sourced from the Food Corporation of India (FCI) and C Heavy Molasses (CHM).
The procurement aims to meet the demand for ethanol blending in petrol, aligning with the government’s ambitious goal to achieve 18% ethanol blending in petrol for the ongoing ethanol supply year. With the ethanol blending programme, the government is looking to enhance the country’s energy security, reduce dependency on imported fuels, and promote the use of domestically produced biofuels. The tender is largely focused on ethanol sourced from subsidised rice and C Heavy Molasses. Under the ethanol blended petrol (EBP) programme, the government has set a cap on the maximum quota for rice sales to ethanol distilleries at 24 lakh tonnes, with the price of rice fixed at ₹22.50 per kilogram. This is part of the government’s strategic plan to blend bioethanol produced from food grains into the petrol supply chain. The OMCs have projected a demand of 70.86 crore litres for the second quarter (Q2) of the 2024-25 period, running from February to April 2025, and 53.06 crore litres for the third quarter (Q3), running from May to July 2025. This demand will be met by sourcing ethanol from a combination of food grains, molasses, and other materials.
In addition to the tender announcement, the government has adjusted the price structure for ethanol production. On January 17, 2025, the government reduced the price of rice allocated for ethanol production to ₹22.50 per kilogram. This price reduction comes with a subsidy of ₹17.25 per kilogram, which will be covered by the public exchequer. Furthermore, the government has set the ex-mill price of ethanol derived from CHM at ₹57.97 per litre, marking a ₹1.69 increase for the 2024-25 period. Prices for ethanol derived from bagasse-based molasses (BHM) and sugarcane juice remain unchanged at ₹60.73 and ₹65.61 per litre, respectively. The subsidy and price adjustments aim to make ethanol production more viable for distilleries and ensure that the supply of ethanol remains consistent with the government’s blending targets. These changes are expected to encourage distilleries to ramp up production, ensuring the fulfilment of blending targets.
The ethanol blending programme in India has made significant progress over recent years. During the 2023-24 ethanol supply year, the cumulative ethanol blending reached 14.6%, with oil marketing companies dispensing E20 fuel (20% ethanol-blended petrol) at over 17,400 retail outlets across the country. The total ethanol supply during the same period was approximately 672.5 crore litres, including 231.58 crore litres from sugar mills. This year, with the procurement of additional ethanol and the government’s continued support, India is expected to move closer to its target of 18% ethanol blending in petrol, a key component of the country’s broader biofuel and energy independence strategy. As the ethanol blending programme progresses, the government’s efforts to source ethanol from various domestic materials, including rice, molasses, and food grains, will play a critical role in meeting fuel demands while promoting sustainability. The ongoing adjustments to pricing and procurement mechanisms reflect the government’s commitment to the success of this programme.
For the domestic oil marketing companies, this tender signifies an essential part of their strategy to source renewable energy materials and further integrate ethanol into India’s energy mix. It is also a step towards reducing the country’s carbon footprint and contributing to the global push for more sustainable energy solutions. As the ethanol supply year progresses, stakeholders from across the agricultural and energy sectors will be closely monitoring the success of these initiatives, with an eye on both achieving blending targets and supporting the rural economy through the use of local resources. With a clear focus on sourcing ethanol from rice and C Heavy Molasses, India’s ethanol supply programme is poised to make significant strides in meeting energy goals for 2024-25. The continued government support and price adjustments are expected to drive growth in the biofuels sector, benefiting both the environment and the economy. As this tender progresses, it will be interesting to see how the market responds and how the country advances towards its ambitious ethanol blending targets.
