Petrol could cost Rs 125/litre without ethanol blending: Government

The Ministry of Petroleum and Natural Gas defended the Ethanol Blended Petrol (EBP) Programme against the criticisms regarding costs and food security and stated on Friday that retail prices of petrol in Delhi would have shot up to about ₹125 per litre during peaks of global crude oil if ethanol blending had not been introduced in the country.

The Ministry of Petroleum and Natural Gas highlighted the significant financial relief extended to citizens amid volatility in international markets, "The result? Nearly ₹30 per litre in savings at the pump during the peak of the crisis. The value of ethanol blending 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."

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During the time when the Indian crude basket reached approximately USD 135 per barrel, people consumed petrol priced at ₹94.77 per litre simply because 20% of each litre has been produced in India and has been completely insulated from global market pass-through.

In a statement, the ministry explained that when the Indian crude basket increased to around USD 135 per barrel, the price of petrol without ethanol was likely to be around ₹125 in Delhi. Consumers were charged ₹94.77 per litre only 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 EBP Programme has generated more than ₹1.97 lakh crore in savings as far as foreign exchange is concerned, as it has helped in substituting over 316 lakh metric tonnes of crude and reducing CO₂ emissions by more than 950 lakh metric tonnes.

The ministry also dismissed claims that ethanol blending is sustained by taxpayer subsidies. "Ethanol blending isn't a taxpayer subsidy. It's India's energy insurance and it has already delivered when the crisis hit," it said.

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The initiative has resulted in direct payments worth more than ₹1.66 lakh crore to farmers and distillers, creating a sustainable local market for agricultural Products at the same time as their 88% dependence on crude oil imports has been significantly reduced.