It costs more money to produce E20 fuel than to produce pure petrol for Indian Oil Marketing Companies.
E20 fuel blends 20% Ethanol with 80% Petrol to create a blend that is being sold to the Indian public by various Oil Marketing Companies. So, considering the ethanol purchase price of ₹70 per liter, a 20% petrol-ethanol mixture costs ₹58 per liter, compared to ₹55 per liter for pure petrol.
Why does E20 Fuel Cost More than Pure Petrol?
E20 costs around ₹3 more than pure petrol because buying industrial-grade ethanol costs Oil Marketing Companies (OMCs) ₹ 70 per liter, and producing pure petrol costs them around ₹55 per liter at an $85 per barrel price.
Let us break down this calculation for easier understanding.
1. The Blend Composition
E20 fuel consists of:
- 80% Pure Petrol (base gasoline)
- 20% Ethanol
2. Base Input Costs (per Liter)
- Pure Petrol production cost: ₹55 per liter (at ~$85/barrel crude)
- Ethanol procurement cost: ₹70 per liter
3. Calculating the Cost of 1 Liter of E20
To make 1 liter of E20 blend, OMCs mix 0.8 liters of petrol with 0.2 liters of ethanol:
- Petrol component (80%) at ₹55 = ₹44
- Ethanol component (20%): at ₹70 = ₹14.00
- Total raw material cost for 1 liter of E20:₹44.00 + ₹14.00 = ₹58.00
4. Summary Comparison
| Fuel Type | Calculation | Base Cost per Liter |
| Pure Petrol (E0) | 100% Petrol | ₹55.00 |
| E20 Blend | 80% Petrol (₹44) + 20% Ethanol (₹14) | ₹58.00 |
| Difference | ₹58.00 – ₹55.00 | +₹3.00 |
Logic Presented by the Government for E20 Fuel
As per the policy of the Government of India and various statements given by the Petroleum Ministry under Minister Nitin Gadkari, the aim of the E20 fuel is to reduce India’s import bill. Since India is a trade-deficit country, this results in devaluation of the Indian currency and depletion of foreign exchange reserves for oil imports.
A Better Suggestion to the Government of India
India consumes around 1 million liters of petrol per day, and E20 aims to bring this down to say 800,000 liters per day, saving roughly 20% on the import bill.
Blending E20 costs more at ₹3 per liter, as shown in the calculation above. So, blending 1 million liters of E20 petrol costs roughly ₹3 million per day, or ₹30 lakhs per day in Indian terms. This amounts to a net annual extra spend of ₹109.5 crore (365 days).
The same money can be spent on subsidies or charging infrastructure, which is the actual roadblock in EV adoption in the country.
What is E20 Fuel?
E20 is a 20% Ethanol-blended petrol aimed at reducing oil imports in India. The idea originates from Brazil, which implemented the project in the 1970s.
The main problems with E20 fuel are that it is believed to damage non-E20-compliant engines in the long run.
Disclaimer: Godi Media aims to provide better information
