E20 mixing in trial phase, Centre tells SC; court orders status quo on ethanol quota

New Delhi: The Supreme Court asked the state-run oil marketing companies to keep ethanol supply allocations for Ethanol Supply Year (ESY) 2025-26 unchanged. This was in response to the Karnataka High Court's recent order directing enhancement of ethanol allocation for the ESY.

Attorney general R Venkataramani said the E20 blending programme is an "ongoing experiment" and that its full impact will become clearer by next year. He told the apex court on Tuesday that the high court order would destabilise the national policy of 20% ethanol blending with petrol.

Changes may Fuel Litigation

Such petitions are pending before several high courts, he said, while seeking liberty to file a transfer petition seeking consolidation of all the suits.

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The status quo order by a bench of justices MM Sundresh and Sheel Nagu was issued on an appeal by Bharat Petroleum (BPCL) challenging the Karnataka High Court decision of June 16. That had asked the three OMCs — BPCL, Hindustan Petroleum (HPCL) and Indian Oil (IOC) — to consider a representation filed by Vinp Distilleries and Sugars for enhanced ethanol allocation for the 2025-26 supply year. Vinp Distilleries, a dedicated ethanol manufacturer, had entered into a long-term offtake agreement with the OMCs in 2022.

Venkataramani, representing BPCL, said the ethanol allocation exercise attained finality on October 17, 2025, and allocations were communicated to 378 suppliers for a total supply of 10.5 billion litres of ethanol, of which 6.8 billion litres had already been supplied by June 18. If one supplier’s quota was enhanced, others similarly placed would claim parity, which would open the floodgates for litigation and throw the supply chain into disarray, he said, warning that judicial intervention could destabilise the nationwide blending policy.

BPCL is the industry coordinator for the petrol-ethanol blending programme, for which cumulative offers for the supply of 17.59 billion litres were received after a tender. BPCL had allocated procurement quantities to various suppliers for a total of 10.48 billion litres of ethanol.

In its appeal, BPCL said Vinp cannot claim an absolute right to supply ethanol based on its designed production capacity to the detriment of other suppliers, as allocations have been made to vendors.

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The high court had held that dedicated ethanol plants established under the government's policy and bound by Long-Term Offtake Agreements (LTOAs) to supply ethanol exclusively to OMCs could not be denied the benefit of preferential allocation envisaged under those agreements.

Last year, OMCs had floated a tender inviting bids for the supply of 10.50 billion litres of denatured anhydrous ethanol for ESY 2025-26. Vinp Distilleries, which had participated in a pre-bid meeting pursuant to the notification, was allotted 39.20 million litres. It then moved the high court against what it said was too low an allotment, claiming to have invested a huge amount in ethanol production. It also alleged that the OMCs exercised an absolute monopoly over the procurement of ethanol and the company’s production of the chemical cannot be supplied to any other private entity.