IOCL, BPCL and HPCL pay ₹70.2/litre for ethanol, above estimated petrol cost

PSU oil marketers procured 705.43 crore litres of ethanol worth ₹49,577 crore through June in ESY 2025-26. The average ₹70.2-per-litre purchase price exceeds an estimated ₹53 refinery-gate petrol cost, while the government has not cleared blending beyond E20.

— Source publishedTue, 21 Jul, 2026, 17:07 IST·First seen Tue, 21 Jul, 2026, 17:27 IST·Source Financial Express · BrandWagon

What happened

Indian Oil Corporation (IOCL) · Indian PSU fuel retailers are paying about Rs 70.2 per litre for ethanol, above an estimated Rs 53 refinery-gate petrol cost.

Key facts

  • PSU OMCs procured 705.43 crore litres of ethanol for Rs 49,577 crore in ESY 2025-26 through June
  • Average ethanol procurement price: Rs 70.2/litre
  • Ethanol procurement: 1,033.31 crore litres worth Rs 73,996 crore in ESY 2024-25
  • Estimated pre-tax refinery-gate petrol cost: about Rs 53/litre
  • India's average crude import cost: Rs 57.42/litre in FY27 through July
  • 501 ethanol suppliers were registered with OMCs as of July 16
  • Government has not decided to raise ethanol blending above E20

Why this matters

For corporate-development teams, the pricing gap and E20 policy ceiling make ethanol supply partnerships or capacity deals attractive only where they secure lower-cost feedstock, subsidies or clearer higher-blend demand.

What to watch

  • Cabinet or petroleum-ministry approval for blending above E20 or a revised ethanol-blending roadmap.
  • Official OMC disclosures on ethanol inventory, contracted volumes, blending rates, and marketing-margin impact.
  • Changes in administered ethanol procurement prices or feedstock-specific incentives.
  • Monthly national ethanol blending percentage versus the E20 target and regional supply availability.
  • Announcements on flex-fuel vehicle adoption, E20-plus compatible vehicle standards, and retail-outlet capex.
  • Any retail petrol/diesel price intervention, excise-duty adjustment, or direct subsidy for OMC blending costs.
  • Monitor whether OMCs slow fresh ethanol tenders, defer deliveries, or seek changes to supply contracts.
  • Expect pressure for a policy decision on E20-plus standards, flex-fuel vehicles, and fuel-station dispensing infrastructure.
  • Watch for ethanol-price revisions by feedstock category, especially maize, rice, damaged foodgrain, and sugarcane-derived routes.
  • Assess whether OMCs seek retail fuel-price adjustments, government compensation, or accounting treatment that limits reported marketing-margin damage.
  • Track sugar mills and distilleries for inventory build, weaker ethanol realization guidance, and a shift back toward sugar production.

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