Without ethanol blending, petrol would cost ₹125 per litre, says govt

The government defended its ethanol blending programme, saying it shielded consumers from global oil price shocks and rejected claims of taxpayer-funded subsidies

Without ethanol blending, petrol would have cost Rs 125 per litre for consumers when global crude oil prices surged recently, the government said on Friday, adding that the use of ethanol resulted in a saving of Rs 30 per litre at the pump.

 

"When the Indian crude basket surged to around $135 per barrel, petrol without ethanol blending was projected to cost around Rs 125 per litre in Delhi. Instead, consumers paid Rs 94.77 per litre because 20 per cent of every litre was domestically produced ethanol, procured at stable, pre-agreed prices that were insulated from the global crude price spike," the Ministry of Petroleum and Natural Gas (MoPNG) said in a statement.

 

 

It added that the real question is not whether ethanol is cheaper, but whether India is better protected and what Indians would have paid if there had been no ethanol blending when global oil prices surged. The statement comes amid a raging controversy over claims that ethanol blending affects vehicle mileage and engine life.

 

"That is the real value of ethanol blending. It is not about being the cheapest fuel every day. It is about protecting Indian consumers from extreme volatility in global oil markets, strengthening India's energy security, and keeping more of the country's fuel bill within the Indian economy rather than sending it overseas," MoPNG said.

 

The ministry described the ethanol blending programme as an insurance policy against global oil shocks, asserting that it should not be viewed in the context of day-to-day price competition.

 

"Ethanol blending is not a taxpayer subsidy. It is India's energy insurance and it has already delivered when the crisis hit," the statement said.

 

The ministry said it had taken note of claims that the government sold Food Corporation of India (FCI) rice worth Rs 37 per kg to distilleries at Rs 23 per kg, causing a loss of Rs 10,000 crore. It also referred to claims that the government had admitted ethanol is more expensive than petrol and that E20 survives only because of taxpayer subsidies.

 

"Only the surplus, certified by the Department of Food & Public Distribution after every food security obligation has been met, is approved for ethanol production. What actually goes into the ethanol programme is damaged grain, broken rice and foodgrain unfit for human consumption — stocks that would otherwise rot in warehouses," the ministry said.

 

It added that the programme is moving further ahead through the Pradhan Mantri JI-VAN Yojana, under which India is rapidly expanding second-generation (2G) ethanol production from agricultural residue, reducing dependence on foodgrains altogether. The ministry also said the claim that FCI rice was sold to ethanol producers at an unusually low price was incorrect.

 

"The programme does not depend on rice. It uses whichever approved feedstock is available. In ESY 2023-24, FCI rice contributed virtually nothing, just 0.02 per cent of ethanol production. By ESY 2025-26, its share increased to 24.64 per cent only because surplus FCI stocks became available after all food security needs had been met," MoPNG said.

 

The ministry added that during the same period, maize's share declined from 42.6 per cent to 35.96 per cent, showing that producers simply switch between different feedstocks depending on availability.