Ethanol blending won't lower fuel rates: Ex-HPCL chief busts 'myth'

India's ambitious ethanol blending programme has delivered significant gains in reducing dependence on imported crude oil, but consumers should not expect it to translate into cheaper petrol prices, according to former Hindustan Petroleum Corporation Limited (HPCL) Chairman and Managing Director M.K. Surana.

Speaking at an industry event, Surana dismissed the widely held belief that increasing ethanol content in petrol would automatically lower retail fuel prices, describing it as a "myth." He stressed that the primary objective of the government's ethanol blending programme is to improve energy security, support farmers and reduce foreign exchange outgo on crude oil imports—not to bring down pump prices.

Focus is on energy security

India has steadily increased ethanol blending in petrol over the past few years as part of its broader strategy to reduce reliance on imported fossil fuels. The government has set an ambitious target of achieving 20% ethanol blending, a milestone that officials say has been reached ahead of schedule in several regions.

Surana noted that ethanol procurement, transportation, storage and blending involve their own costs, making it unrealistic to assume that blending alone would reduce the price consumers pay at fuel stations.

Instead, he said the policy should be viewed through the lens of long-term national benefits, including improved energy resilience and lower exposure to volatile global crude oil markets.

Benefits beyond fuel prices

Experts say the ethanol blending initiative has multiple economic and environmental advantages. It creates an additional revenue stream for sugar mills and grain producers, supports rural incomes and helps cut carbon emissions by partially replacing fossil fuels with biofuels.

Government data has also highlighted substantial savings in crude oil imports and foreign exchange due to higher ethanol blending levels, while contributing to India's clean energy transition.

However, industry experts caution that retail petrol prices are influenced by a range of factors, including international crude oil prices, taxes imposed by the Centre and states, refining costs, dealer commissions and currency fluctuations.

Consumer expectations

Surana's remarks come amid ongoing public discussions over fuel affordability, with many consumers hoping that greater use of domestically produced ethanol would lead to lower petrol prices.

He maintained that while ethanol blending offers strategic and environmental benefits, it should not be marketed as a measure to directly reduce fuel costs for motorists.

As India continues expanding its biofuel programme, policymakers are expected to focus on balancing energy security, environmental goals and agricultural growth while ensuring a stable fuel supply.