New Delhi: The Ministry of Petroleum and Natural Gas of India has clarified that ethanol blended fuel cannot be priced lower than conventional petrol, as the production cost currently exceeds that of regular fuel. This statement comes amid growing public expectations that blending ethanol with petrol would help reduce retail fuel prices.
Officials explained that while the government promotes ethanol blended fuel to cut emissions, enhance energy security, and support the agricultural sector, the economics are not yet favorable for cheaper pricing. The procurement price of ethanol, sourced primarily from sugarcane and maize, has risen due to higher input costs, transportation expenses, and limited supply chains.
Currently, India uses 10% ethanol blended fuel nationwide, with plans to move toward a 20% blend by 2025. However, blending mandates have coincided with volatile crude oil prices, making it challenging to pass cost benefits to consumers. According to the Oil Ministry, the cost per liter of ethanol in some regions is higher than the refinery gate price of petrol, leaving no margin for a price cut.
The government remains committed to the ethanol blended fuel program for its environmental and rural economic benefits but stressed that affordability will depend on scaling up production and improving efficiency in ethanol sourcing. Industry analysts suggest that technological advancements, better feedstock availability, and reduced transportation bottlenecks could eventually narrow the cost gap.
For now, motorists should not expect ethanol blended fuel to be a cheaper alternative to petrol, despite its long term potential in reducing India’s oil import bill.
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