E20 costs more at current crude prices, but saves forex, boosts farmers' income, reduce oil dependence: Govt
New Delhi, July 10
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 US$70 per barrel, E20 is actually costlier to produce than pure petrol. If crude rises to US$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.
— ANI
Reader Comments
Interesting perspective. In the US we've debated ethanol for decades. India's approach seems more strategic - tying energy security to domestic agriculture. The forex savings of Rs 1.97 lakh crore is staggering. But is the cost difference being passed to consumers or absorbed?
Fantastic news for our farmers! My cousin in Maharashtra is getting better prices for sugarcane because of this programme. Finally government thinking about rural economy along with energy security. Reduce oil imports and help farmers - double dhamaka! 🎉
But what about the water usage for ethanol crops? India is already water-stressed. And food vs fuel debate is real. The government should also invest in electric mobility and solar. Diversification is key, not just one solution. Just my two cents.
Smart move by the government. We import 85% of our oil, that's a huge vulnerability. If even 20% blending reduces imports, it's worth it. Plus the environmental benefit of 952 lakh tonnes CO2 reduction is significant. But I hope we also focus on non-grain ethanol sources like agricultural waste.
My car's engine light came on after using E20 for two months. Service center said it's fine but mileage is slightly lower. So while the theory is good, practical implementation needs more work. Auto companies should have better prepared vehicles for higher ethanol blends.
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