The Centre has announced it will hike the excise duty on petrol by Rs. 2/- a litre this October if the fuel is not blended with ethanol.
In her Budget speech today, Union Finance Minister Nirmala Sitharaman said blending of ethanol in petrol is a priority of the NDA government.
“To encourage the efforts for blending of fuel, unblended fuel shall attract an additional differential excise duty of Rs. 2/- litre from the first day of October 2022,” the Union minister said.
This announcement is expected to make private fuel retailers, who primarily sell unblended petrol, retail ethanol-blended petrol. State-run companies such as Indian Oil, HPCL and BPCL sell blended petrol.
Will the cost of blended petrol be reduced at the same time?
On an average, about 8 percent of fuel sold by the State-run firms, which control around 90 percent of fuel outlets in India, are currently blended with ethanol.
Although Centre has approved the use of E20 (20 percent ethanol with 80 percent petrol) as automotive fuel in the country, the reality is that due to shortages in availability of ethanol, petrol sold in India does not even have 10 percent ethanol content yet.
The Centre wants oil marketing companies to begin sales of E20 from 2023 as it seeks to cut its oil import bill.