Supreme Court orders status quo on Karnataka HC direction to revisit ethanol allocation after BPCL says it will affect E20 fuel programme

In a major relief to oil marketing companies (OMCs) and a shot in the arm for Central government's E20 fuel programme, the Supreme Court on Tuesday ordered status quo with respect to the Karnataka High Court direction to OMCs to revisit the distribution of ethanol for the 2025–26 supply year..The Court was hearing a plea filed by Bharat Petroleum Corporation Limited (BPCL) challenging a June 2026 Karnataka High Court order.BPCL, represented by Attorney General R Venkataramani, argued that reopening the allocation process after contracts had already been finalised and supplies had begun could disrupt the Centre's ethanol blending programme, which aims to mix 20 percent ethanol with petrol, popularly known as E20 fuel..A Bench comprising Justice MM Sundresh and Justice Sheel Nagu issued notice to dedicated ethanol plants which had earlier procured favourable order from the High Court for enforcement of an agreement granting them rights to supply ethanol to OMCs."Issue notice. List on reopening. Till the next date of hearing, there shall be status quo," the Supreme Court ordered..Bharat Petroleum, which coordinates ethanol procurement for the government's Ethanol Blended Petrol (EBP) programme, argued the allocation process had been completed in October 2025 and that a significant quantity of ethanol had already been delivered. It challenged the High Court's direction requiring OMCs to reconsider the allocation made to VINP Distilleries and Sugars, contending that changing allocations at this stage could affect the entire supply process..During the hearing, the Bench asked the company why it had approached the Supreme Court directly instead of filing an appeal before the Karnataka High Court's Division Bench."Why not approach division bench?" asked Justice Sundresh..Attorney General R Venkataramani, appearing for Bharat Petroleum, submitted that ethanol supply contracts had already been finalised in October 2025 and that similar challenges were pending before multiple High Courts across the country. He argued that the issue had wider ramifications for the implementation of the Centre's ethanol blending policy. He also sought liberty to file a transfer petition to have all such cases heard together by the Supreme Court since the matter requires an authoritative decision..Senior Advocate Sidhartha Dave, appearing for VINP Distilleries, opposed the request."Transfer plea is just a bogey," Dave said.Responding to the same, AG Venkataramani told the Court, "This matter needs to be decided before October.".After hearing the parties, the Bench ultimately, agreed to hear the case and issued notice while also ordering status quo..The dispute stemmed from the Centre's Ethanol Blended Petrol (EBP) Programme, under which oil marketing companies procure ethanol from sugar mills and distilleries and blend it with petrol to reduce crude oil imports, improve energy security, and cut emissions. VINP Distilleries and Sugars had established a DEP and manufactured ethanol to exclusively supply to the OMCs in question. The State, in accordance with the National Policy on Biofuels 2018, identified certain companies and distilleries for the supply of ethanol and invited bids for the execution of a long term offtake agreement (LTOA). VINP's bid was shortlisted and it was asked to establish plants that could meet the demand required in the expression of interest (EOI).The LTOA monopolised the ethanol procurement mechanism and prohibited the plants from supplying ethanol to anyone other than BPCL, HPCL, and IOCL. VINP responded to the EOI with an application in 2021 proposing to set up a 300 Kilo Litre Per Day (KLPD) ethanol plant that would be operational for a total 330 days to produce 9.90 crore litres of ethanol per annum. For 3 years, both parties abided by the LTOA.However, in the 2025 tender, the OMCs added a clause allowing them to depart from the terms of the LTOA, thus allowing procurement from non-DEPs. Bharat Petroleum, acting as the industry coordinator for the EBP programme, invited bids from ethanol producers and received offers to supply around 1,759 crore litres of ethanol. Procurement quantities totalling about 1,048 crore litres were subsequently allocated among 378 suppliers, and supply contracts were finalised in October 2025.VINP was allotted a lesser quantity of 1.44 crore litres of ethanol supply against its bid for 9.26 crore litres in a tender bid.Upon raising a complaint to supply the entire production amount, the OMCs did not respond.VINP then approached the High Court. The High Court directed the OMCs to reconsider the allocation made to VINP.It reasoned that Dedicated Ethanol Plants, which have hitherto supplied ethanol exclusively to the OMCs and which are contractually prohibited from either manufacturing anything else or supplying ethanol to any third party, cannot be relegated to the short end of the stick..Bharat Petroleum has challenged this order before the Supreme Court.According to its appeal, reopening a procurement process that has already been concluded and substantially implemented would prompt similar claims from other suppliers, disrupt the supply chain, and jeopardise the Centre's target of achieving 20% ethanol blending in petrol..[Read Live Coverage]