• Source:JND

Why E20 Petrol Is Not Cheap In India:  The Ethanol-Blending Program (EBP) of India has remained one of the most discussed topics across the country over the last few months, now. From social media to chit-chat among friends, E20 petrol has become a hot topic. While social media platforms are full of misinformation and fake news, vehicle owners have also raised several genuine concerns. One such concern is why E20 petrol is not cheap in India. We have explained the price economics and the reasons why the ethanol-blended fuel doesn’t cost less despite 20 per cent blending.

What Is E20 Petrol?

E20 is a rating given to a certain type of flex fuel. A flex fuel is a blend of two types of fuel, and it acts as an alternative to traditional fuel types, such as petrol and diesel. Flex fuel can be obtained by blending petrol with an oxygenate, such as Ethanol or Methanol. Damage to the engine metal and plastics, along with phase separation, are some of the most common risks associated with Methanol blend fuel, and thus, most of the major global automotive manufacturers prefer ethanol blend petrol.

E20 simply means a fuel type that contains 20 per cent ethanol blended with 80 per cent petrol. Similarly, E25, E30, or E85 are fuel blend ratings. In these ratings, E is used here for Ethanol, while the number stands for the percentage of Ethanol in the fuel type.

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Why E20 Petrol Is Not Cheap In India?

The debate around E20 petrol recently reached parliament, and the government responded to concerns regarding the issue. The Minister of State for Petroleum and Natural Gas, Suresh Gopi, told the Rajya Sabha that no evidence of widespread engine damage or vehicle breakdown was found among 23 crore vehicles running on E20 petrol.

The government has also explained why E20 petrol is not cheaper in India when compared to petrol. The government clarified that due to factors such as procurement, taxes, transportation, and storage, the production of ethanol involves higher costs. Further, the government has also clarified that farmers are paid a fair price for ethanol supplied under the programme.

For instance, maize-based ethanol is purchased at around Rs 71.86 per litre, before adding costs such as GST, transportation, and storage. The government has also stated that if crude oil prices trade around 70 USD per barrel, the cost of production of ethanol remains more or less the same. Notably, the prices for Brent crude oil are currently trading at more than 90 USD per barrel, and thus, E20 petrol costs the same as petrol.

Why E20 Petrol Is Not Cheap: Key Highlights

  • E20 petrol is not cheap due to production costs involving transportation, storage, procurement, and taxes
  • Farmers are paid a fair price under the Ethanol Blending Program (EBP). For example: maize-based ethanol is purchased at around Rs 71.86/litre
  • As only 20 per cent ethanol is blended into 80 per cent petrol, the fluctuation in crude oil prices makes its production more expensive
  • If crude oil is priced at 70 USD per barrel, ethanol production costs the same or more than petrol; currently, Brent crude is trading above 90 USD per barrel

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E20 Petrol: The Impact So Far

As mentioned earlier, the concerns regarding E20 petrol were recently raised in Parliament, and the government has responded to the same. Many might believe that if E20 petrol costs the same as normal petrol, what are its benefits? The government, in its response in the Rajya Sabha, clarified that the rollout of E20 petrol in the country has resulted in savings of more than Rs 1.97 lakh crore in forex. It further clarified that blending 20 per cent of ethanol has also substituted 316 lakh metric tonnes of crude oil, and the move also has an environmental impact, as 952 lakh metric tonnes of emissions have been avoided. Lastly, as anticipated, the rollout of E20 petrol has also benefitted farmers, and it has generated additional income of Rs 1.66 lakh crores for cultivators.

E20 Petrol Benefits: Key Highlights

  • Rollout of E20 petrol has saved more than Rs 1.97 lakh crore in forex for the country
  • 20 per cent of ethanol has substituted 316 lakh metric tonnes of crude oil, reducing the country’s dependence on global crude oil supply
  • The rollout of E20 also has an environmental impact, and 952 lakh metric tonnes of CO2 emissions have been avoided
  • The move has generated additional income of Rs 1.66 lakh crore for farmers

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