SC orders status quo on Karnataka HC direction to reopen ethanol allocation process
The Supreme Court on Tuesday (June 30, 2026) ordered a status quo on the Karnataka High Court’s direction seeking reopening of the ethanol allocation process for the 2025-26 supply year, which had already been closed.
A bench comprising Justices MM Sundresh and Sheel Naga was hearing a plea filed by state-owned Bharat Petroleum Corporation Ltd. (BPCL), which had argued that reopening the allocation process would disrupt the implementation of the Centre’s policy of achieving 20% ethanol blending in petrol, popularly known as E20 fuel.
In its order dated June 16, 2026, the High Court directed Oil Marketing Companies (OMCs) – BPCL, Hindustan Petroleum Corporation Ltd. (HPCL) and Indian Oil Corporation Ltd. (IOCL) – to consider VINP Distilleries and Sugars’ request for increased ethanol allocation before finalizing the tender process.
The High Court held that specialized ethanol plants, set up under government policy and contractually bound to supply ethanol exclusively to OMC, could not be denied the benefit of preferential allocation contemplated by the applicable agreement. Accordingly, it directed the OMCs to consider the distiller’s request for increased allocations for the Ethanol Supply Year (ESY) 2025-2026.
“Disrupts the Allocation Process”
Appearing for BPCL, Attorney General R. Venkataramani said that as the industrial coordinator for the Ethanol Blended Petrol (EBP) programme, BPCL had completed the allocation on October 17, 2025. It said that order volumes were awarded to 378 suppliers totaling about 1,050 million liters of 7 liters of ethanol received under the 5 1 Sugar Ethanol Offer from the 1 Sugar Ethanol Offer. By June 18, nearly 680 million liters had been delivered.
The Attorney General argued that strengthening one supplier’s allocation at this stage would trigger similar claims from other similarly situated suppliers, thereby disrupting the entire allocation process.
“The result of this order is that there are about 75 similarly placed suppliers… We have to de-allocate all of them,” he added.
Mr. Venkataramani further stated that the ethanol blending program is still evolving and its impact will become clearer over time.
“Each year there can be either a spike in demand or a drop in demand. The 20% ethanol blending program is still something the government is trying to experiment with. By next year, October, the demand could probably go down,” he said.
The Bench, however, asked why BPCL went directly to the Supreme Court instead of filing an appeal in the Division Bench of the Karnataka High Court.
“Why not approach the division bench?” Judge Sundresh asked.
The lawyer said that similar applications were pending in several high courts and sought liberty to file a transfer application to be heard jointly by the apex court. He argued that a definitive decision needed to be made before the next round of ethanol supply contracts could be concluded in October.
“If I go to the tribunal and then again to other high courts, it will be delayed,” he said.
Senior advocate Sidhartha Dave, appearing for VINP Distilleries and Sugars, opposed the application and termed the proposed transfer petition as a “spook”.
After hearing the parties, the Bench issued a notice of objection and directed the parties to maintain status quo till the matter is taken up for hearing after the apex court resumes regular sessions on July 13.
“Notice of issue. List of reopening. Status quo to be maintained till next date of hearing,” the Bench ordered.
However, in a statement issued by the Department of Law and Justice on Tuesday, the Attorney General’s Office said reports referring to remarks about the E20 program being an “experiment” were “completely false”. “It is expressly made clear that any suggestion that the government has termed the E20 program before the Supreme Court as an ‘experiment’ is incorrect and does not constitute suggestions made on behalf of the Union of India,” the statement said.
The Union government amended the National Biofuels Policy in 2022 to speed up the gradual blending of ethanol into petrol. Under the revised policy, the target was to achieve ethanol blending of 12.06% in 2022–23, 14.6% in 2023–24 and 17.98% in 2024–25 (by February 2025), before achieving the 20% blending milestone.
The government has since achieved a target of 20% mixing. However, the program has drawn criticism regarding its potential impact on older vehicles and fuel consumption.
The center dismissed those concerns, saying there was no evidence to suggest that ethanol-laced gasoline causes mechanical damage to vehicles.
Published – 30 Jun 2026 19:18 IST