E20 costs more at current crude prices, but saves forex, boosts farmers' income, reduce oil dependence: Govt

New Delhi: The Ministry of Petroleum and Natural Gas has said that E20 petrol is currently costlier to produce than pure petrol at prevailing global crude oil prices, but the ethanol blending programme is helping shield Indian consumers from global oil price volatility while strengthening the country's long-term energy security.

In a detailed clarification issued through a set of frequently asked questions on the Ethanol Blended Petrol Programme, the ministry said the economics of ethanol depend on international crude oil prices. It noted that maize-based ethanol is currently procured at around Rs 71.86 per litre, even before GST, transportation, storage and depot handling costs.

"Therefore, if international crude oil is trading at around $70 per barrel, E20 is actually costlier to produce than pure petrol. If crude rises to $120-130 per barrel, the economics naturally reverse and ethanol becomes even cheaper," the ministry said.


The ministry added, "The real question is, 'How did India manage to protect consumers from the full impact of volatile global crude prices?'" It explained that nearly 20 per cent of every litre of petrol sold in India today is domestically produced ethanol, reducing dependence on imported crude oil and insulating part of fuel costs from fluctuations in international oil prices.

Looking ahead, the ministry said continued ethanol blending is expected to improve India's energy security by reducing crude oil imports, lowering foreign exchange outgo, providing greater fuel price stability and increasing incomes for farmers.

According to the ministry, the Ethanol Blended Petrol Programme has already saved more than Rs 1.97 lakh crore in foreign exchange, substituted nearly 316 lakh metric tonnes of crude oil, reduced around 952 lakh metric tonnes of carbon dioxide emissions and transferred over Rs 1.66 lakh crore directly to farmers.

The clarification forms part of the ministry's response to concerns around the ethanol blending programme. It said India's transition to E20 has been a phased process spanning more than two decades, with consultations held with automobile manufacturers, oil marketing companies, testing agencies and other stakeholders before implementation.