The Supreme Court has scheduled the Bharat Petroleum ethanol dispute for hearing on 29 July. The case concerns ethanol allocation to Dedicated Ethanol Plants for the Ethanol Supply Year 2025-26. Attorney General R. Venkataramani, appearing for Bharat Petroleum Corporation Limited (BPCL) and other oil marketing companies, assured the Court that the Centre is working on a fair and balanced allocation mechanism for all eligible suppliers.
Supreme Court Issues Directions
A Bench of Justices M.M. Sundresh and Prasanna B. Varale directed all parties to complete service of notices in the connected transfer petitions and appeals before the next hearing. The judges also considered a request from counsel representing the Dedicated Ethanol Plants. They asked the Attorney General to facilitate a meeting with senior government officials. The objective is to explore an administrative solution while the legal proceedings continue.
Centre Promises Fair Allocation
Attorney General Venkataramani informed the Court that any decision benefiting one Dedicated Ethanol Plant would affect other suppliers because the ethanol allocation pool is limited. Many manufacturers compete for the same quantity of ethanol, making the allocation process complex.
He explained that increasing the allocation for one supplier would require reducing the share of another. According to him, every similarly placed supplier could make a comparable claim.
The Attorney General assured the Bench that the government has no intention of favouring or discriminating against any supplier. He added that senior officials are working to identify the most practical solution. He also said he would discuss the issue directly with the oil marketing companies to ensure fair and equal allocation.
Ethanol Plants Highlight Their Investments
Senior counsel for the Dedicated Ethanol Plants argued that these manufacturers established their facilities solely to supply ethanol to oil marketing companies under long-term procurement agreements. They invested substantial amounts based on those commitments.
Counsel urged the Attorney General to convene a meeting with senior government officials because the outcome directly affects these investments. The Bench acknowledged the competing commercial interests. It observed that administrative discussions could continue alongside the judicial process instead of waiting for the litigation to conclude.
Background of the Dispute
The litigation began after VINP Distilleries challenged the ethanol allocation for the 2025-26 supply year. The company sought a higher allocation under its long-term procurement agreement with Bharat Petroleum Corporation Limited.
Earlier, the Karnataka High Court directed the oil marketing companies to consider the company’s representation before finalising the tender process.
BPCL later challenged that order before the Supreme Court. During the hearing on 30 June, the Attorney General submitted that nearly 75 similarly placed suppliers had filed similar petitions before different High Courts. He argued that allowing individual directions would disrupt ethanol allocation across the country.
The Attorney General also contended that the Karnataka High Court’s order effectively granted a mandatory interim injunction. He maintained that the agreement required procurement only on a best-efforts basis and did not guarantee a fixed quantity of ethanol allocation.
On the other hand, counsel for VINP Distilleries argued that the company had built its plant exclusively to supply BPCL. It had invested heavily in reliance on the agreement and remained entitled to ethanol lifting worth nearly ₹200 crore. Counsel submitted that the company should not lose its allocation while the procurement agreement remains valid.
A vacation Bench of Justices M.M. Sundresh and Sheel Nagu had earlier issued notice, ordered the parties to maintain status quo, and directed that VINP Distilleries’ representation should not be decided until the next hearing.
Next Hearing on July 29
The connected matters will now return to the Supreme Court on 29 July. By then, the government may have made progress through the administrative consultations discussed during the hearing.
The Bharat Petroleum ethanol dispute is significant because its outcome could influence how oil marketing companies honour ethanol offtake commitments to dedicated plants when available allocations fall below expected or contracted volumes.
