Oil companies exclude sugar-based ethanol from 2026-27 procurement tender

State-run oil marketing companies (OMCs) have excluded ethanol made from sugarcane juice, sugar syrup and B-heavy molasses from their latest procurement tender for 2026-27, as the government seeks to protect domestic sugar supplies while maintaining its petrol-blending programme.

The tender, issued by Bharat Petroleum Corporation Ltd (BPCL) on October 16 on behalf of OMCs, seeks bids for around 11 billion litres of ethanol for the supply year from November 2026 to October 2027. The requirement is aimed at meeting the target of blending 20 per cent ethanol with 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.

“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 tender permits ethanol produced from maize, broken rice, surplus rice procured by the Food Corporation of India and C-heavy molasses.

It has also reduced the procurement price for maize-based ethanol to Rs 68.86 per litre from Rs 71.86, cutting the incentive to Rs 2.79 per litre from Rs 5.79.

The move comes amid concerns over domestic sugar availability and prices following poor rainfall in key sugar-producing states, including Maharashtra and Karnataka, which has raised the risk of lower output.

India, the world’s largest sugar consumer, has expanded ethanol blending to reduce crude oil imports and vehicle emissions. However, diverting sugarcane and sugar for fuel can compete with food supplies, particularly when production is constrained.