Ethanol has become pricier than petrol: Oil ministry

Ethanol has become costlier than petrol, the oil ministry said, rejecting calls to make ethanol-blended fuel cheaper despite its lower energy content.

“Some concerns have been voiced that ethanol-blended petrol should be cheaper than non-blended fuel and that this cost advantage has not been passed on to the customers,” the ministry said in a statement on Tuesday. It emphasised that the demand for lower prices was based on a Niti Aayog report released in 2020-21, when ethanol was cheaper than petrol.

Procurement prices have since risen, and the current weighted average price is now higher than petrol, according to the ministry.

The current average procurement cost of ethanol, including transportation and GST, is Rs 71.32 per litre, the ministry said.

A liter of petrol currently costs Rs 94.77 in Delhi, which includes a base price of Rs 52.83 plus taxes and dealer commission, according to oil company data.

Ethanol’s energy content is about 33% lower than pure petrol, according to the US Energy Information Administration (EIA). “In general, vehicle fuel economy may decrease by about 3% when using E10 relative to petrol that does not contain fuel ethanol,” the EIA notes. In the US, pumps mostly sell 10% blended petrol (E10), while in India the supply is predominantly 20% blended petrol (E20). By this yardstick, fuel economy may decrease by about 6% when using E20 fuel.

The lower energy content of ethanol, and the resulting impact on fuel economy, has prompted calls for cheaper blended fuel.

“The critiques suggesting that E20 causes a ‘drastic’ reduction in fuel efficiency are misplaced,” the oil ministry said, adding vehicle mileage depends on multiple factors beyond fuel type.

“The efficiency drop (if any) in E10 vehicles has been marginal,” it said. “For some manufacturers, vehicles have been E20 compatible from as far back as 2009. The question of any drop in fuel efficiency in such vehicles does not arise.”