Petrol in Delhi would have cost around ₹125/litre without ethanol blending during crude spike, says Centre

Published 1 August 2026 · local

Petrol in Delhi would have cost around ₹125 per litre when global crude oil prices surged to nearly $135 a barrel, had oil marketing companies

Petrol in Delhi would have cost around ₹125 per litre when global crude oil prices surged to nearly $135 a barrel, had oil marketing companies not blended ethanol with petrol, the Centre said on Friday, TOI reported. In a statement, the Ministry of Petroleum and Natural Gas (MoPNG) said consumers instead paid ₹94.77 per litre because 20% of every litre of petrol comprised domestically produced ethanol, procured at stable, pre-agreed prices that were insulated from fluctuations in global crude oil prices. "When the Indian crude basket surged to around $135 per barrel, petrol without ethanol blending was projected to cost around ₹125 per litre in Delhi.

Instead, consumers paid ₹94.77 per litre because 20 per cent of every litre was domestically produced ethanol," the ministry said. The clarification comes amid criticism over the rollout of E20 petrol -- a blend containing 20% ethanol and 80% petrol -- with concerns ranging from reduced fuel efficiency to alleged diversion of foodgrains and taxpayer subsidies. Also Read | Govt says E20 fuel safe for vehicles, defends ethanol blending programme Ethanol is 'energy insurance', not a subsidy The ministry rejected claims that ethanol blending survives on taxpayer support, describing the programme as an "energy insurance policy" that protects consumers from volatility in international oil markets. "It is not about being the cheapest fuel every day.

It is about protecting Indian consumers from extreme volatility in global oil markets, strengthening India's energy security, and keeping more of the country's fuel bill within the Indian economy rather than sending it overseas," it said. The ministry also denied allegations that subsidised Food Corporation of India (FCI) rice meant for welfare schemes was being diverted for ethanol production. According to the government, only surplus grain certified after meeting all food security obligations is approved for ethanol production. It said the programme largely uses damaged grain, broken rice and other stocks unfit for human consumption, while also expanding second-generation ethanol production from agricultural residue under the Pradhan Mantri JI-VAN Yojana.

Also Read | E20 petrol can reduce fuel economy by 2-6%: Nitin Gadkari What about mileage? The government's clarification came a day after Road Transport and Highways Minister Nitin Gadkari informed Parliament that E20 petrol could reduce fuel efficiency by 2% to 6%, depending on a vehicle's age and category. Citing a joint study by the Automotive Research Association of India (ARAI), the Society of Indian Automobile Manufacturers (SIAM) and Indian Oil Corporation (IOC), Gadkari said some rubber components and gaskets in older BS-III vehicles manufactured before 2016 may require replacement when using E20 fuel.