The latest ethanol tender for the 2025-2026 supply year has ignited significant worry among ethanol producers. They argue that the new order unfairly prioritizes fresh entrants in regions with ethanol shortages, a move that could destabilize established operations.
According to the Grain Ethanol Manufacture’s Association (GEMA), the announced allocations reveal that a staggering 350 distilleries are not receiving sufficient procurement orders from Oil Marketing Companies (OMCs). This is particularly problematic as many of these facilities were established based on prior agreements and policy support, including long-term off-take understandings with OMCs.
GEMA highlighted a specific clause in the tender document’s ‘Allocation Methodology and Criteria,’ which states, “The zones where the offers from the distilleries located within the zone are less than the requirement of that zone, this has been considered as the deficit zone. For these zones, offers from the vendors shall be considered in full for allocation.”
While this policy aims to encourage local sourcing in deficit zones, critics argue it overlooks existing surplus capacity in neighboring states, much of which was developed through previous promotional efforts by OMCs. Consequently, the allocation framework bypasses distilleries that had secured prior commitments like Long-Term Offtake Agreements and Expressions of Interest.
C. K. Jain, President of GEMA, emphasized the urgent need for ‘a more holistic procurement model.’ He advocated for a system that takes into account ‘surplus availability across States, pre-existing capacities and investments, and prior understandings and commitments made with distilleries.’”