OilMin rejects blended fuel fears, says ethanol priced higher than petrol

Despite higher ethanol prices, India sticks to its blending mandate for energy security, farmer income, and sustainability

The Ministry of Petroleum and Natural Gas (MoPNG) on Tuesday said oil-marketing companies are continuing to focus on ethanol-blended fuel despite ethanol prices being higher than petrol.

 

The ministry was responding to concerns that ethanol-blended petrol might result in reduced mileage, vehicle life, and increased cost. 

“Over time, the procurement price of ethanol has increased and now the weighted average price of ethanol is higher than the cost of refined petrol,” the ministry said in a statement.

 

“Despite the increase in price of ethanol in comparison to petrol, the oil companies have not gone back on the ethanol blending mandate because the programme delivers on energy security, boosts farmers’ incomes and environmental sustainability," it added.

 

Citing the NITI Aayog report 2020-21, critics argued that the blended fuel should be cheaper than the non-blended variety and that the customers have not benefited at any cost advantage.

 

The ministry said when the NITI Aayog report was prepared, ethanol was cheaper than petrol.   

 

The average procurement cost of ethanol for the Ethanol Supply Year (ESY) 2024-25, as on July 31, was ₹71.32 per litre, inclusive of transportation and GST. For producing E20, oil-marketing companies blend 20 per cent of this procured ethanol with motor spirit. The price of C-heavy molasses-based ethanol increased from ₹46.66 (ESY 2021-22) to ₹57.97 (ESY 2024-25). The price of maize-based ethanol shot up from ₹52.92 to ₹71.86 over the same period.

 

Responding to apprehensions on whether the country will go beyond E20 very rapidly, the ministry said any move beyond E20 requires careful consideration, for which extensive consultations are underway. "The current road map makes the government committed to E20 till October 31, 2026,” it said, adding that decisions to extend the date beyond the deadline will involve submission of the report of the inter-ministerial committee, evaluation of its recommendations, consultations of stakeholders and a considered decision of the government in this regard. “That decision is yet to be taken," it said.

 

During the past 11 years, from ESY 2014-15 to ESY 2024-25 up to July 2025, ethanol blending in petrol by the public-sector oil marketing companies has resulted in savings of more than ₹1,44,087 crore of foreign exchange and crude oil substitution of about 24.5 metric tonnes. At 20 per cent blending, it is expected that payment to the farmers in the current year alone will be to the tune of ₹40,000 crore and forex savings will be around ₹43,000 crore, according to the ministry.