E20 Petrol Shielded Consumers from Crude Oil Price Hikes
By ThePip Desk
India’s E20 ethanol blending program shielded consumers from soaring crude prices, saving ~Rs 30/litre and preventing petrol from reaching Rs 125/litre.
The Indian government has asserted that its E20 ethanol-blended petrol program significantly protected consumers from volatile global crude oil prices, effectively saving approximately Rs 30 per litre during peak surges. This initiative served as a crucial energy insurance policy, preventing petrol prices from escalating further.
The Ministry of Petroleum and Natural Gas detailed that petrol prices in Delhi could have reached around Rs 125 per litre when the Indian crude basket nearly hit $135 per barrel. However, due to the 20% ethanol blending, consumers paid only Rs 94.77 per litre, illustrating the direct financial benefit.
Addressing Food Security Concerns
The government also addressed criticisms regarding the use of subsidized foodgrain for fuel production, clarifying that ethanol output does not compromise food security. Foodgrain is first allocated for the Public Distribution System, welfare schemes, and mandatory buffer stocks.
Only certified surplus stocks, damaged grain, broken rice, and foodgrain deemed unfit for human consumption are approved for ethanol manufacturing. India is additionally expanding second-generation (2G) ethanol production from agricultural residue under the Pradhan Mantri JI-VAN Yojana to lessen reliance on foodgrain over time.
The ethanol program incorporates a flexible mix of feedstocks, with surplus FCI rice contributing 24.64% to ethanol production in Ethanol Supply Year 2025-26 after all food security needs were successfully met. This flexible approach ensures food security remains paramount.
Broader Economic and Environmental Impact
Beyond consumer protection, the E20 program has delivered substantial economic advantages for the nation. It has generated foreign exchange savings exceeding Rs 1.97 lakh crore by reducing crude oil imports.
The program also substituted more than 316 lakh metric tonnes of imported crude and achieved a reduction in carbon emissions by over 950 lakh metric tonnes. Additionally, the initiative channeled payments surpassing Rs 1.66 lakh crore to farmers and distillers across the country.
The Centre emphasized that ethanol blending remains vital for fortifying India’s long-term energy security and diminishing its susceptibility to unpredictable global oil markets. This strategy is particularly important given that the country still imports nearly 88% of its crude oil requirements.