Karnataka High Court orders review of ethanol allocation dispute
Karnataka High Court ordered BPCL, HPCL and IOCL to review Vinp Distilleries’ ethanol claim within four weeks, after a 6.33 crore-litre gap opened on its ESY 2025-26 bid.
Justice M. Nagaprasanna on June 16 ordered Bharat Petroleum Corporation Limited, Hindustan Petroleum Corporation Limited and Indian Oil Corporation Limited to review Vinp Distilleries and Sugars Pvt Ltd’s request for 9.26 crore litres of ethanol and decide it within four weeks.
The Dharwad Bench ruling put a 6.33 crore-litre shortfall under scrutiny after Vinp, a Haveri-based distiller with annual production capacity of about 9.90 crore litres, said it was told by email on October 17, 2025 that it would receive only 3.92 crore litres for ethanol supply year 2025-26. The company had bid for 9.26 crore litres.
The court’s reasoning turned on Clause 6.8 of the Long-Term Offtake Agreement, which Vinp said the OMCs had already used to lift procurement from 1.44 crore litres to 3.92 crore litres. On that basis, the court held that the same clause could not be applied selectively to deny a larger allocation later and said the company’s representation had to be considered under the agreement signed with BPCL, HPCL and IOCL.
The dispute lands in a procurement system that has grown larger and more rigid as India pushes blending higher. The National Policy on Biofuels, as amended in 2022, advanced the 20% ethanol-blending target from 2030 to ethanol supply year 2025-26. In August 2021, the oil marketing companies floated an expression of interest for long-term offtake agreements with dedicated ethanol plants in deficit states, and the Press Information Bureau said that first EOI drew 197 bidders.
The same procurement cycle shows the scale of the market Vinp is trying to enter. Oil marketing companies invited bids for about 1,050 crore litres of ethanol for ESY 2025-26 and allocated around 1,048 crore litres in the first cycle, leaving little slack for plants that miss the initial award. Against that backdrop, the High Court’s order gives Vinp another round of review, but it also tests how much discretion the OMCs can exercise when long-term contracts are supposed to support investment in dedicated ethanol capacity.
For distilleries in deficit states, the ruling raises the question of whether procurement decisions will continue to follow a consistent reading of the Long-Term Offtake Agreement or vary by allocation round. The court did not grant Vinp the full 9.26 crore litres outright; it required a fresh, reasoned decision from the three OMCs within four weeks of receiving the order copy.
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