Ethanol push: OMCs to increase procurement target to 1,050 Cr Litres

FCI’s extra 28 Lakh Tonnes of rice spurs OMCs to scale ethanol orders to 1,050 Cr Litres

Oil Marketing Companies (OMCs) are set to increase their ethanol procurement orders to 1,050 crore litres for the ongoing Ethanol Supply Year (ESY) 2024-25, up from the previously allocated 947 crore litres, as they prepare to invite fresh tenders for an additional 30 crore litres.

This revision follows the Centre’s decision to allocate 28 lakh tonnes (lt) of additional rice from the Food Corporation of India’s (FCI) Central Pool for ethanol production—raising the total rice allotment for ethanol to 52 lt this year. The move supports the government’s Ethanol Blending with Petrol (EBP) programme, which aims for 18 per cent blending in the current ESY, and 20 per cent in 2025-26.

Interestingly, ethanol blending had already surpassed 18.5 per cent during November 2024 to April 2025, indicating that the revised procurement may help OMCs reach the 20 per cent target ahead of schedule. However, industry sources argue the increased order should have been closer to 130 crore litres, based on the full ethanol production potential from the newly allocated rice.

Using a standard conversion of 470 litres of ethanol per tonne of rice, the 52 lt allocation could yield about 245 crore litres of ethanol, with the government’s subsidy burden estimated at Rs 10,000 crore. Despite this, distilleries had lifted less than 10 lt of the initially allocated 24 lt as of May 8.

OMCs purchase ethanol at Rs 58.50 per litre when produced from subsidised FCI rice, priced at Rs 22.50/kg for ethanol production.