Near-zero E100 demand puts brakes on OMCs' E85 rollout

New Delhi: Oil marketing companies (OMCs) are wary of committing to a widespread expansion of E85 (85% ethanol, 15% petrol) fuel outlets, having burnt their fingers with the E100 experiment. With nearly 400 E100 pilot outlets seeing almost zero offtake, they want flex-fuel vehicle sales to scale up first before supporting the Centre's push for ethanol blended fuel to reduce import costs as well as reliance on fossil fuels, said industry executives.

"We initially rolled out E100 fuel at close to 400 outlets as a pilot, but offtake was virtually negligible. We have since scaled back sharply to five-six outlets as there were simply no takers. While the government has been pushing us, we are waiting to see how the transition evolves," said a senior Indian Oil Corporation official, who did not wish to be identified.

E100 is pure (100%) ethanol fuel, usable only in flex-fuel vehicles. E85 is ethanol blended with petrol, but it also needs flex-fuel engines. The lack of flex-fuel vehicles has stalled their roll-out.

Meanwhile, the government is reportedly likely to slow down the E25 roll-out, amid concerns that higher ethanol content could damage engines in existing vehicles. The vehicles built between 2012 and March 2023 were designed only for 10% ethanol blends, and those made before April 2025 aren't fully E20-compliant either.

"While auto companies are just launching flex-fuel vehicles, with current sentiments the volumes will be nowhere close to what's needed to justify scaling up dispensing infrastructure. Until we see these vehicles selling, putting up more E85 pumps is putting the cart before the horse," the official added.

Road transport and highways minister Nitin Gadkari last month cleared regulations legally permitting E100 use, with a roadmap envisaging about 500 flex-fuel outlets by December, scaling to nearly 5,000 across major cities by the end of 2027. On the ground, though, only about 48 retail outlets nationally are dispensing E85, with few takers.

OMCs blame the lack of offtake on the thin price difference between E85 and petrol. E85 has been launched at ₹82.12 per litre, compared to ₹102.12 per litre for petrol in Delhi. According to a report by the think tank Council on Energy, Environment and Water, petrol is 2-14% cheaper than pure ethanol fuel (E100) at current prices. Ethanol also carries less energy than petrol, so vehicles running on it burn more fuel to cover the same distance, which pushes ethanol's real cost 15-25% higher than petrol, it said.

Therefore, for ethanol to truly beat petrol on price, it would need to be sold at about ₹52-63 a litre, far below current levels. This is well below the production cost of any commercially viable feedstock assessed. Until that happens, there is little incentive for fuel companies to push ethanol fuel more aggressively, according to the report.