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State-run oil marketing companies (OMCs) are set to procure more than 300 crore litres of ethanol annually from upcoming manufacturing facilities of biofuel across eight states and two union territories. The OMCs Ethanol Procurement Group (OEPG) has invited bidders to enter into a long-term off-take agreement with upcoming Dedicated Ethanol Plants (DEP) in Tamil Nadu, Kerala, Andhra Pradesh, Telangana, Gujarat, Rajasthan, Goa, Odisha and Union Territories of Jammu & Kashmir and Ladakh.

The OMCs—Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL)—will collectively procure 301 crore litres of ethanol annually from the plants, which are expected to start commercial operations within two years from the signing of the off-take agreement.

The OEPG has introduced a marking system, giving preference to corn/maize as feedstock for ethanol production. The highest marks are given to the use of corn/maize or tapioca, followed by a combination of rice and corn/maize, and sugarcane-based feedstock.

The OMCs will procure the highest amount of ethanol from Tamil Nadu, followed by Kerala, Rajasthan, Gujarat, and Andhra Pradesh. Plant proponents who intend to set up or are in the process of setting up the DEP are eligible to apply, as well as those who have set up the plant but have not started production prior to the date of the EOI publication.

The bidding process requires the submission of an affidavit undertaking that the proposed DEP will be commissioned within two years from the date of the letter of intent (LoI). A tripartite agreement will be signed with the shortlisted bidders who have entered into a Long Term Offtake Agreement and desire to have a Tripartite Agreement for financing from banks/financial institutions.

This move is part of the government’s efforts to promote the use of ethanol as an alternative fuel and reduce India’s dependency on imported crude oil. The increased procurement of ethanol will also benefit agricultural communities involved in the production of corn, maize, and sugarcane.

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