Why E20 Petrol Costs More Than Pure Petrol At Current Crude Prices
The government has said that E20 petrol is not cheaper than pure petrol at prevailing crude oil prices because ethanol is procured at remunerative rates aimed at ensuring fair returns for Indian farmers.According to a clarification by the Ministry of Petroleum and Natural Gas, maize-based ethanol is currently procured at around Rs 71.86 per litre, excluding GST, transportation, storage and depot-handling costs.
With international crude oil prices at around $70 per barrel, E20 is currently more expensive to produce than pure petrol. However, the government said the economics could reverse if crude oil prices rise to around $120-130 per barrel, at which point ethanol would become comparatively cheaper.
Ethanol Blending Aims To Reduce Import Dependence
The ministry said the objective of ethanol blending is not to lower petrol prices on any particular day but to reduce India's dependence on imported crude oil and shield consumers from volatility in international energy markets.
According to the government, nearly 20 per cent of every litre of petrol sold in India now comprises domestically produced ethanol procured at a fixed price. This portion of the fuel is therefore insulated from fluctuations linked to Brent crude prices, geopolitical tensions and disruptions to global shipping.
The ministry said this has helped India moderate increases in retail fuel prices despite disruptions in global energy markets. It also said the country has recorded one of the lowest fuel price increases among major economies and neighbouring countries over the past four years.
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