Indian process engineering company Praj Industries Ltd (BOM:522205) on Thursday announced a contract with Indian Oil Corp Ltd (BOM:530965), or IOCL, for the construction of two second-generation ethanol plants.

The companies have signed a binding agreement for cost sharing. One of the plants will be located in Panipat in the northern Indian state of Haryana and the other in Dahej in the western state of Gujarat. The facilities will have the capacity to produce 100,000 litres (26,420 gallons) of ethanol per day.

The deal follows the signing of a memorandum of understanding (MoU) earlier this year, whereby the oil company selected Praj as its technology partner for the development of multiple second-generation bioethanol plants.

Concurrently with inking the IOCL agreement, Praj has signed a MoU with Bharat Petroleum Corp Ltd (BOM:500547), or BPCL, which has selected Praj as technology partner for a second-generation bioethanol plant, with the same daily production capacity of 100,000 litres, but in the state of Orissa.

The engineering firm said project timelines and cost estimations are being completed.