Oil Companies to Sell Petrol With 20% Ethanol From April 2023: Petroleum Ministry

A target of 5% biodiesel blending in diesel is proposed by 2030


The Ministry Of Petroleum And Natural Gas (MoP&NG) has notified that oil companies will sell ethanol-blended petrol (EBP) with a percentage of ethanol up to 20% from April 1, 2023.

A target of 20% blending of ethanol in petrol is proposed by Ethanol Supply Year (ESY) 2025-26. An indicative target of 5% biodiesel blending in diesel is proposed by 2030.

The ministry hopes to achieve this target by reinforcing ongoing ethanol or biodiesel supplies by increasing domestic production by setting up second-generation biorefineries, developing new feedstock for biofuels, and new technologies for conversion to biofuels. It aims to create a suitable environment for biofuels’ integration with primary fuels.

The policy encourages augmenting indigenous feedstock supplies for biofuel production by utilizing the wastelands for feedstock generation. However, depending upon the availability of domestic feedstock and blending requirements, the import of feedstock for biodiesel production would be permitted. The National Biofuel Coordination Committee (NBCC) proposed under this policy will decide feedstock import requirements.

To promote the production of biofuels by units located in special economic zones or export-oriented units, the import of feedstock for the production of biofuels meant for export by them will be allowed without any restriction.

Advanced biofuels

Advanced biofuels are produced from lignocellulosic feedstocks (agricultural and forestry residues), non-food energy crops (grasses, algae), animal dung or industrial waste and residue streams, or any mixed combination of the above feedstock. Fuels such as second-generation ethanol, biodiesel made from used cooking oil, non-edible tree-borne oils, short gestation non-edible oil-rich crops, green diesel from renewable sources and industrial waste, and biofuels produced from synthesis gas are also considered advanced biofuels.

Advanced biofuels can also be drop-in fuels from renewable sources and industrial waste, algae-based biofuels, halophytes-based biofuels, bio-CNG, bio-methanol, and Di Methyl Ether derived from bio-methanol.

Export of biofuels

As the domestic biofuel availability is much lower than the country‘s requirement, the export of biofuels will generally not be permitted. However, export may be permitted when there is a surplus, or the domestic requirement has been met. Biofuels can also be exported if the price of biofuels made from domestic feedstocks for the domestic market becomes high due to increased domestic feedstock prices, resulting in poor domestic sales.

Earlier, Bharat Petroleum Corporation, Indian Oil Corporation, and Hindustan Petroleum Corporation entered into a long-term purchase agreement for upcoming dedicated ethanol plants across India. Oil companies, project proponents, and banks signed the first Tripartite-cum-Escrow Agreement. State Bank of India, Indian Overseas Bank, and Indian Bank are part of the tripartite agreement with oil companies and project proponents.

The agreement is designed to ensure that payment received by ethanol plants is utilized to service the debt extended by these banks. Ethanol produced by these plants will be sold to oil companies for blending with petrol as per the government’s Ethanol Blended Petrol Program.

In March 2021, the Ministry of Road Transport and Highways (MoRTH)  greenlighted using a blend of 20% ethanol and 80% gasoline as an automotive fuel.