Ethanol blending saved consumers Rs 30/litre during crude spike: Govt

NEW DELHI: Petrol was projected to cost around Rs 125 per litre in Delhi when global crude prices touched $135 a barrel if India had not blended ethanol with petrol, the petroleum ministry said on Friday, defending the ethanol-blending programme against what it described as “misleading” claims about its costs, impact on food security and alleged taxpayer subsidy.The clarification came amid criticism that Food Corporation of India (FCI) rice was supplied to distilleries at concessional rates, allegedly causing losses to the exchequer, and that ethanol blending survives only because ethanol is more expensive than petrol.The ministry said consumers paid Rs 94.77 per litre because 20% of every litre comprised domestically produced ethanol procured at pre-agreed prices, insulating retail fuel prices from the global crude price spike. “The result was nearly Rs 30 per litre in savings at the pump during the peak of the crisis,” it said.In a detailed clarification, the ministry rejected allegations that foodgrain meant for the poor was being diverted to produce ethanol or that subsidised rice supplied by the FCI was being used to artificially support the programme. “Ethanol is not built around cheap rice. It is built around a flexible mix of approved feedstocks, with FCI rice used only when certified surplus stocks are available after meeting every food security obligation,” the ministry said, adding that food security obligations always take precedence and that grain is released for ethanol production only after requirements under the public distribution system, National Food Security Act, welfare schemes and mandatory buffer stocks have been fully met. Responding to criticism over the supply of FCI rice to distilleries, the ministry said rice was only one of several approved feedstocks under the ethanol programme, was priced under the same govt pricing framework as other approved feedstocks, and was not accorded any special treatment. It said FCI rice accounted for just 0.02% of ethanol production in ethanol supply year (ESY) 2023-24, with its share rising to 24.6% in ESY 2025-26 only after surplus stocks became available. During the same period, maize’s share declined from 42.6% to nearly 36%, indicating that distilleries switch between approved feedstocks depending on availability.The ministry also said the programme utilises damaged grain, broken rice and foodgrain unfit for human consumption that would otherwise deteriorate in storage. It added that India is expanding production of second-generation ethanol from agricultural residue under the Pradhan Mantri JI-VAN Yojana to further reduce dependence on foodgrain-based feedstock.

Rejecting the contention that ethanol blending survives on taxpayer subsidy, the ministry maintained that the objective of the programme was not to make petrol cheaper on a day-to-day basis but to shield consumers from sharp swings in global crude prices while reducing dependence on imported crude oil, imports of which meet nearly 88% of India’s requirement. “Ethanol blending is an insurance policy against global oil shocks and not a day-to-day price competition,” it said.