India's transition to E20 petrol, which contains 20 per cent ethanol and 80 per cent petrol, is unlikely to make fuel cheaper for consumers despite its long-term benefits for energy security, according to former Hindustan Petroleum Corporation Ltd (HPCL) Chairman and Managing Director M.K. Surana. His remarks come amid a growing debate over the economic and consumer impact of the government's ethanol blending programme.
Speaking at an industry discussion on biofuels, Surana said ethanol currently costs oil marketing companies more than petrol on an ex-refinery basis, making it unrealistic to expect lower retail fuel prices from higher ethanol blending. According to him, ethanol procurement prices range between Rs 56.71 and around Rs 71 per litre, while the ex-refinery cost of petrol is about Rs 53 per litre. As a result, the primary objective of the blending programme is not price reduction but strengthening India's energy security by reducing dependence on imported crude oil.
Focus Shifts to Energy Security
Surana said ethanol blending offers strategic advantages by insulating the economy from sharp fluctuations in global crude oil prices. By replacing a portion of imported fossil fuel with domestically produced ethanol, India can reduce its import bill, improve foreign exchange savings and support the country's long-term energy transition. He added that while ethanol may not directly lower pump prices, it can help cushion fuel costs during periods of extreme volatility in international oil markets.
The comments come as the nationwide rollout of E20 petrol has sparked concerns over fuel efficiency and vehicle compatibility. The government has maintained that E20-compatible vehicles are designed to operate safely on the fuel, while acknowledging that ethanol's lower calorific value may result in a marginal reduction in mileage. It has repeatedly emphasised that the programme is intended to reduce carbon emissions, cut crude oil imports and boost demand for domestically produced biofuels rather than deliver cheaper petrol.
Industry observers note that the debate has intensified following recent consumer complaints and legal disputes over E20 compatibility, prompting renewed scrutiny of the blending programme. Even so, policymakers continue to view ethanol blending as a key pillar of India's clean energy and import substitution strategy, with the long-term benefits expected to outweigh short-term concerns over fuel costs and efficiency. |
