India is among the countries providing the world's cheapest petrol, Minister of Petroleum and Natural Gas of India said on Friday, citing ethanol blending as a major reason behind the low fuel prices.
"Today, India is among the countries providing the world's cheapest petrol, and a major reason behind this is also ethanol blending. When the world is troubled by rising crude oil prices, India has ethanol purchased from its farmers, whose price remains fixed for the entire year," he said in a post on X.
Also read: Crude oil retreats, but India's fuel bills stay up
The conflict in the Middle East led to a major hike in crude oil prices, driving domestic fuel rates across countries.
In an interview with Times Now, the oil minister said that benefit of using ethanol makes it less dependent on global brent prices which have ranged between $68 to $128 in the last few months.
In another post, Puri wrote, "India has shifted from high-water crops like sugarcane and rice towards low-water crops like maize for ethanol production. This is increasing farmers' income as well as conserving water. Today, maize's share in ethanol production has reached nearly 35%."
According to an ET report, Indian state-run oil ocmpanies have incurred nearly Rs 75,000 crore losses in Q1 amid delayed price hikes.
Petroleum and Natural Gas Ministry asserted that India's ethanol blending programme has played a key role in protecting consumers from volatile global crude oil prices, helping the country record one of the lowest increases in retail fuel prices among major economies over the past four years.
Addressing concerns over why E20 petrol is not cheaper than conventional petrol, the ministry said the comparison overlooks the government's policy of ensuring remunerative prices for farmers supplying ethanol.
"The question should not be, 'Why isn't E20 cheaper?' The real question is, 'How did India manage to protect consumers from the full impact of volatile global crude prices?'" it said.
In an official release, the ministry said the government currently procures maize-based ethanol at around Rs 71.86 per litre, excluding GST, transportation, storage and depot handling costs, to ensure fair compensation for farmers.
Also read: E20 causes ‘minor’ drop in vehicle mileage, Puri says, as India gears up for E100 fuel
It noted that whe n international crude oil is priced at around $70 per barrel, producing E20 fuel is costlier than pure petrol. However, if crude prices rise to $120-130 per barrel, the economics reverse, making ethanol comparatively cheaper.
According to the release, nearly 20% of every litre of petrol sold in India now consists of domestically produced ethanol, the procurement price of which remains fixed and is not affected by daily fluctuations in Brent crude prices, geopolitical tensions or disruptions to global shipping.
"One-fifth of your fuel tank is insulated from international oil volatility," Puri-led ministry said, adding that the ethanol blending programme is aimed at reducing India's dependence on imported crude rather than making petrol cheaper on any given day.
The oil ministry said the ethanol strategy helped India register the lowest increase in retail fuel prices among major economies and neighbouring countries during a period marked by significant global energy market disruptions.
