SC orders status quo on Karnataka HC ethanol allocation ruling

The Supreme Court ordered status quo on the Karnataka High Court's direction to enhance ethanol allocation for ESY 2025-26. Hearing BPCL's plea, the court examined concerns that altering allocations could disrupt India's 20 per cent ethanol blending programme and trigger similar legal claims

New Delhi: The Supreme Court on Tuesday directed status quo with regard to an order of the Karnataka High Court which directed enhancement of ethanol allocation for the Ethanol Supply Year (ESY) 2025-26.

The top court was hearing a plea filed by an oil marketing company which claimed that the high court’s order would destabilise the national policy of 20 per cent ethanol blending for petrol.

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A bench of Justices MM Sundresh and Sheel Nagu issued notice on the plea filed by the Bharat Petroleum Corporation Ltd challenging the high court order.

The high court had directed the Bharat Petroleum Corporation Limited, Hindustan Petroleum Corporation Limited and Indian Oil Corporation Limited to consider and decide a representation submitted by a dedicated ethanol manufacturer seeking enhancement of ethanol allocation for the Ethanol Supply Year (ESY) 2025-26.

The high court had held that dedicated ethanol plants, which were established pursuant to government policy and are contractually bound to supply ethanol exclusively to Oil Marketing Companies (OMCs), cannot be denied the benefit of preferential allocation contemplated under the Long-Term Offtake Agreement (LTOA). Attorney General R Venkataramani submitted that HC’s order directing OMCs to consider enhancement of ethanol allocation to VINP Distilleries and Sugars would destabilise the national policy.

The top law officer submitted that the 20 per cent ethanol blending programme in petrol is still an ongoing experiment and the impact of the policy would become clearer by next year.

Venkataramani pointed out that the ethanol supply contracts were concluded in October 2025. He said the ethanol allocation exercise attained finality on October 17, 2025, and allocations were communicated to 378 suppliers for a total supply of 1,050 crore litres of ethanol, of which 680 crore litres had already been supplied by them by June 18 If one supplier’s quota was enhanced, other similarly placed would claim parity which would open litigation floodgates, he said.

In its plea before the top court, Bharat Petroleum said the private supplier VINP Distilleries cannot claim an absolute right to supply ethanol based on its designed production capacity, to the detriment of other suppliers, as allocations have been made to vendors.