PNN
New Delhi [India], February 11: The Bharat Independent Ethanol Producers Association (BIEPA) has drawn attention to the potential implications of an interim order passed by the Hon'ble Karnataka High Court on ethanol allocation, noting that it highlights the need for a balanced and consultative approach to sustain India's independent ethanol production ecosystem.
Non-LTOA units, which represents over 115 ethanol manufacturing units that do not have a Long Term Off-Take Agreement (LTOA) with the OMCs, said these plants together account for an installed capacity of nearly 750 crore litres. The facilities, which were set up in response to the government's ethanol blending roadmap targeting 20 per cent blending of ethanol in petrol, are mostly setup prior to the plants which have a LTOA. These plants have cumulative investments exceeding ₹20,000 crore, largely financed by banks and financial institutions.
These units were established under government-notified schemes such as the Interest Subvention Scheme and B-2 category environmental clearances, and are by default mandated to operate as dedicated ethanol plants. Unlike LTOA units, non-LTOA plants do not have assured long-term offtake arrangements and depend entirely on allocations from oil marketing companies (OMCs) for capacity utilisation.
Commenting on the same, Pushpinder Singh, President, BIEPA, said, "Independent ethanol producers answered the government's call to build capacity for India's energy transition even prior to and without the LTOA regime. As the sector evolves, allocation mechanisms must remain balanced and predictable to sustain investor confidence and ensure the long-term stability of the ethanol blending programme."
India's ethanol production capacity has expanded to around 1,700 crore litres, while annual demand is estimated at approximately 1,200 crore litres. In recent tenders, OMCs have followed an allocation approach intended to distribute offtake across the ecosystem, factoring in both LTOA and non-LTOA capacities to support sector-wide sustainability.
BIEPA noted that recent developments, including interim judicial directions in an ongoing matter, have brought renewed attention to the allocation framework and its implications for independent producers that are fully dependent on ethanol offtake for their operations.
The association has urged the Ministry of Petroleum and Natural Gas to engage with stakeholders and evolve an allocation methodology that remains equitable, transparent, and aligned with the long-term objectives of the ethanol blending programme.
BIEPA also reiterated the need for a long-term demand roadmap beyond the 20 per cent blending target, including faster adoption of flex-fuel vehicles and development of alternative ethanol applications such as Sustainable Aviation Fuel (SAF), diesel blending, and bio-based chemicals, to ensure demand growth keeps pace with capacity creation.
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