Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL), have started awarding contracts under the first significant biodiesel procurement initiative for the financial year 2025-26.
17 Apr 2025 | 5262 Views | By Shruti Shiraguppi
India’s state-owned Oil Marketing Companies (OMCs), namely Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL), have launched a significant biodiesel procurement initiative for the financial year 2025-26, signaling a renewed push to bolster the country’s biofuel agenda.
The tender, opened on ...
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India’s state-owned Oil Marketing Companies (OMCs), namely Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL), have launched a significant biodiesel procurement initiative for the financial year 2025-26, signaling a renewed push to bolster the country’s biofuel agenda.
The tender, opened on March 13, 2025, seeks to procure 200 million liters (200,000 kiloliters) of biodiesel for the first quarter (April–June) of the new financial year, marking the first cycle of procurement for FY 2025-26. Identified as EOI No. OMC/EOI/NUCO/BD/MAR25 (CYCLE1) with Tender ID 2025_MKTHO_184206_1, the tender has already resulted in Letters of Intent (LOIs) being awarded to suppliers, including Rajputana Biodiesel Limited and its subsidiary Nirvaanraj Energy Private Limited.
A Milestone for Biodiesel Suppliers
Rajputana Biodiesel Limited, a key player in India’s biofuel sector, along with its subsidiary Nirvaanraj Energy Private Limited, has secured LOIs for the supply of 3,543 kiloliters (KL) of biodiesel to IOCL and HPCL. Valued at approximately ₹30 crore, these orders are slated for execution between April and July 2025. The contracts underscore the growing role of private biodiesel producers in meeting India’s energy needs while aligning with the National Policy on Biofuels, which aims to achieve a 5% biodiesel blending target by 2030.
Other suppliers of biodiesel in India include Kotyark Industries, Emami Agrotech, Universal Biofuels, Muenzer Bharat Pvt. Ltd. and Altret Greenfuels.
The tender, hosted on IOCL’s eProcurement portal (iocletenders.nic.in), invited bids from suppliers across India to supply biodiesel (B100, conforming to IS 15607:2022) to OMC locations nationwide. The scale of the tender—200 million liters—reflects the OMCs’ commitment to scaling up biodiesel procurement, building on the previous fiscal year’s ambitious target of 860 million liters.
Context and Challenges in India’s Biodiesel Program
India’s biodiesel program, initiated in 2005, has faced significant hurdles despite a 408% increase in procurement volumes over the past seven years, from 11.9 million liters in 2015-16 to 60.5 million liters in 2022-23. The blending rate, however, remains stubbornly low at 0.5% to 0.6% for FY 2024-25, far below the 5% target. This contrasts sharply with the ethanol blending program, which has achieved over 16% blending as of December 2024, nearing its 20% goal by 2025-26.
Early challenges in biodiesel production stemmed from the limited success of Jatropha cultivation, which suffered from low yields and long gestation periods. Over time, the policy has evolved to include more viable feedstocks such as Used Cooking Oil (UCO), animal tallow, and acid oil.
However, inconsistent feedstock availability, underdeveloped UCO collection networks, and agronomic challenges with non-edible oilseeds continue to hamper progress. Dr. Rajeev Kumar, an energy policy expert at the Center for Policy Research, noted, “Ethanol has benefited from a more focused policy push, regulated supply chains, and effective pricing mechanisms. Biodiesel, meanwhile, has struggled with feedstock security and economic viability issues.”
Policy Push and Market Dynamics
The timing of the tender is critical, as it precedes the April 2025 implementation of penalties on the sale of unblended diesel, a measure expected to accelerate biodiesel adoption. The OMCs have set a base procurement price of ₹100.12 per liter (excluding GST and transportation costs) for the period February–September 2025, up from ₹91.20 per liter in the previous period (October 2024–January 2025). This price adjustment reflects efforts to make biodiesel production economically viable for suppliers amidst rising feedstock costs.
The tender also aligns with broader energy transition goals. The National Policy on Biofuels emphasizes reducing dependence on fossil fuels, mitigating greenhouse gas emissions, and promoting rural economic development through biofuel production.
The OMCs’ procurement drive is expected to stimulate investment in biodiesel production facilities and strengthen the supply chain for feedstocks like UCO, which is increasingly seen as a sustainable option.
Industry Response and Future Outlook
The awarding of LOIs to companies like Rajputana Biodiesel highlights the growing participation of private players in the biodiesel market. Industry observers view the tender as a positive step, though significant challenges remain. The OMCs’ commitment to regular procurement cycles is encouraging, but achieving the 5% blending target will require addressing feedstock constraints and scaling up production capacity.
The tender’s designation as “CYCLE1” suggests that additional procurement cycles are planned for FY 2025-26, potentially targeting a cumulative volume closer to the 860 million liters procured in FY 2024-25. The success of these efforts will depend on coordinated policy interventions, including incentives for feedstock cultivation, streamlined UCO collection, and investments in refining infrastructure.
Broader Implications
The OMCs’ biodiesel tender for FY 2025-26 marks a pivotal moment in India’s journey toward sustainable energy. By engaging suppliers nationwide and setting clear procurement targets, the government is laying the groundwork for a more robust biodiesel ecosystem.
However, the gap between current blending rates and the 2030 target underscores the need for accelerated action. As penalties for unblended diesel come into effect and market dynamics evolve, the biodiesel sector stands at a crossroads, with opportunities for growth tempered by logistical and economic challenges.
For now, companies like Rajputana Biodiesel and Nirvaanraj Energy are poised to play a key role in this transition, contributing to India’s energy security and environmental goals. As the first quarter of FY 2025-26 approaches, all eyes will be on the OMCs and their suppliers to deliver on the promise of a greener fuel future