Page 49 - Policy Economic Report - August 2025

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Currently, the average procurement cost of Ethanol for Ethanol Supply Year 2024-25, as on 31.07.2025, is
Rs.71.32 per litre, inclusive of transportation and GST. For producing E20, OMCs blend 20% of this
procured Ethanol with Motor Spirit (MS). Price of C-heavy molasses based Ethanol increased from
Rs.46.66 (ESY 2021-22) to Rs.57.97 (ESY 2024-25). Price of Maize-based Ethanol increased from Rs.52.92
to Rs.71.86 over the same period. Despite the increase in price of ethanol in comparison to petrol, the oil
companies have not gone back on the ethanol blending mandate because the programme delivers on
energy security, boosts farmers’ incomes and environmental sustainability.

Ethanol Blending is a national programme. Some seek to derail it by fomenting fear and confusion in the
minds of car owners by selectively picking information and creating a false narrative that insurance
companies will not cover car damage due to use of E20 fuels. This fear mongering is totally baseless and
has been clarified by an insurance company whose tweet screenshot was deliberately misinterpreted to
create fear and confusion. Usage of E20 fuel has no impact of the validity of insurance of vehicles in India.

In the meanwhile, automobile manufacturers continue to engage with vehicle owners to provide them
any support that may be warranted to ensure optimum performance of vehicles. For a vehicle
owner, who believes that his/her vehicle may require further tuning or parts replacement, the entire
network of authorized service stations are available to respond to such requests.

There continue to be apprehensions on whether the country will go beyond E-20 very rapidly. Any move
beyond E-20 requires careful calibration, for which extensive consultations are underway. This has
involved the same vehicle manufacturers who are already in Brazil as well as other manufacturers, entities
involved in supply of feed stocks, R&D agencies, oil companies and Ethanol producers. This process is yet
to reach conclusion. In the meanwhile, the current roadmap commits Government to E-20 upto
31.10.2026. Decisions for beyond 31.10.2026 will involve submission of the Report of the Inter Ministerial
Committee, evaluation of its recommendations, stake holder consultations and a considered decision of
Government in this regard. That decision is yet to be taken.

Government takes multiple steps to safeguard citizens from impact of global crude oil price fluctuations:
Petroleum Minister

Union Minister of Petroleum and Natural Gas, Shri Hardeep Singh Puri, in a written reply to a starred
question in Lok Sabha, stated that the Government is committed towards ensuring energy security,
affordability and accessibility for every citizen. He highlighted that despite international crude oil price
fluctuations, domestic petrol and diesel prices have been reduced owing to various steps taken by the
Government and Public Sector Oil Marketing Companies (OMCs).

The Minister Informed that prices of petrol and diesel are market determined and Public Sector OMCs
take appropriate decisions on pricing. The prices of petroleum products in the country are linked to the
international market, with India importing more than 85% of its crude oil requirements.

Crude oil prices (Indian basket) rose from $55/bbl (March 2015) to $113/bbl (March 2022) and further to
$116/bbl (June 2022), continuing to fluctuate due to geopolitical and market factors. However,

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