Petrol prices can come down by ₹2.60-2.90 a litre if even 10 per cent ethanol blending with fuel is achieved, say industry experts.

Under the Ethanol Blending Programme, the Centre has asked oil marketing companies (OMCs) to target 10 per cent blending of ethanol with petrol by 2022. According to data compiled by the Indian Sugar Manufacturers Association (ISMA), the nationwide average for ethanol blending stands at 4.02 per cent as on October 1.

Octane number

“Blending ethanol with fuel raises the octane number of petrol. Petrol prices can be lowered if OMCs pass on the gains,” Amit Sachdev, South Asia (India, Bangladesh, and Sri Lanka) Representative for the US Grains Council (USGC), said. Petrol is a product of fractional distillation of crude oil, with further treatment, including addition of multi-function additives, to enhance its octane rating and other properties. A higher octane number means engines can burn the same amount of petrol to extract more energy.

“The standardised octane number for petrol in India is 91. The cost of additives required to achieve this rating is built into the price of petrol. At present, splash blending of ethanol without changing the octane level at the refinery increases the octane rating by 2 excessive points, costing an additional ₹1.60 per litre of petrol,” Sachdev said.

Splash blending is done when ethanol is directly poured into petrol. According to Sachdev, the octane rating of petrol goes up when ethanol is splash blended.

“Implementing the E10 blend mandate will translate into savings of ₹2.60-2.90 a litre of petrol,” Sachdev said. However, 10 per cent blending is unrealistic based on current ethanol availability. According to ISMA, OMCs raised a demand for 313.5 crore litres of ethanol during the sugar season 2017-2018.

But the domestic industry could offer only 176.3 crore litres of ethanol for the programme, and agreements for 161.06 crore litres of ethanol were signed by PSU oil marketing companies. This resulted in 4.02 per cent ethanol blending.

Ethanol availability is constrained by procurement price variation and the lack of distilleries, according to the domestic industry. The procurement price of ethanol is fixed by the Centre before every sugar season during ethanol supply year from December 1 to November 30.