Rs 30/Litre Saved: Govt Says E20 Petrol Cushioned Consumers During Crude Spike

The Centre on Friday put a strong defence of its E20 ethanol-blended petrol programme, saying it shielded consumers from soaring global crude oil prices and helped keep retail fuel prices under control during periods of market volatility.

In a detailed clarification issued by the Ministry of Petroleum and Natural Gas, the government said petrol prices in Delhi could have climbed to around Rs 125 a litre when the Indian crude basket touched nearly $135 per barrel, had India relied entirely on fossil fuel-based petrol.

Instead, consumers paid Rs 94.77 per litre, with the government attributing the difference to 20% ethanol blending, which it said insulated fuel costs from the global crude price shock.

ALSO READ | Railways Recommend Premature Retirement Of These Officers. Here's Why

In a detailed clarification, the Ministry of Petroleum and Natural Gas said petrol prices in Delhi would have risen to around Rs 125 per litre when the Indian crude basket surged to nearly $135 a barrel if India had relied solely on conventional petrol.

Instead, retail prices stood at Rs 94.77 per litre, with the government attributing the nearly Rs 30-per-litre difference to 20% ethanol blending, which it said helped cushion consumers from the global crude price spike.

According to the ministry, the E20 programme effectively translated into savings of nearly Rs 30 per litre at the height of the oil price surge, underscoring ethanol's role as an "energy insurance policy" rather than merely a lower-cost alternative to petrol.

The clarification comes amid criticism that the programme diverts subsidised foodgrain for fuel production and survives only because of government support. 

Rejecting those claims, the Centre said ethanol production does not compromise food security, as foodgrain is allocated to the Public Distribution System, welfare schemes and mandatory buffer stocks before any surplus is approved for ethanol production.

The ministry said only certified surplus stocks, along with damaged grain, broken rice and foodgrain unfit for human consumption, are used for ethanol manufacturing. 

It also noted that India is increasingly expanding second-generation (2G) ethanol production from agricultural residue under the Pradhan Mantri JI-VAN Yojana, reducing reliance on foodgrain over time.

The government further said the ethanol programme is built on a flexible mix of feedstocks rather than any single commodity.

ALSO READ | Beyond Diplomacy: India, Australia Find New Momentum Through Education, Technology And Shared Growth

While maize remained the largest contributor for several years, surplus FCI rice accounted for 24.64% of ethanol production in Ethanol Supply Year (ESY) 2025-26 after food security requirements were fully met.

The ministry also highlighted the programme's wider economic gains, saying ethanol blending has helped India save more than Rs 1.97 lakh crore in foreign exchange by reducing crude oil imports, substitute over 316 lakh metric tonnes of imported crude, cut carbon emissions by more than 950 lakh metric tonnes, and channel over Rs 1.66 lakh crore in payments to farmers and distillers.

The Centre maintained that with India still importing nearly 88% of its crude oil requirements, ethanol blending is aimed at strengthening long-term energy security while reducing the economy's exposure to volatile global oil markets.

Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.