Budget 2022: Additional excise duty to promote ethanol blending
SOURCE: Source: ET Bureau Feb 02, 2022Petrol not blended with ethanol will be costlier from October, which would prompt retailers, especially private oil companies, to switch to blended fuel across the country.
"Blending of fuel is a priority of this government. To encourage the efforts for blending of fuel, unblended fuel shall attract an additional differential excise duty of ₹2/ litre from the 1st day of October 2022," finance minister Nirmala Sitharaman said in her Budget speech.
At present, state-run oil companies, which control 90% of the fuel retail pumps, sell ethanol spiked petrol in most parts of the country while private retailers don't.
The average blending ratio for petrol sold by state companies is currently 8% and is targeted to rise to 20% by 2025. "The Budget proposal will disincentivise the sale of unblended petrol. All oil companies will make an extra effort to source ethanol," said HPCL chairman Mukesh Surana. "It will accelerate our path to 20% blending."
Ethanol availability is not uniform and states far away from production centres are likely to have lower average blending ratios.