--- title: "OMCs raise red flag over viability of flex fuels, pricing structure" type: "News" locale: "en" url: "https://longbridge.com/en/news/281655777.md" description: "State-run oil-marketing companies (OMCs) in India have expressed concerns about the viability of flex fuels due to a lack of price difference compared to E20, despite flex fuels having a lower calorific value. A meeting on February 28 highlighted the challenges faced, including minimal demand from previous pilot projects and the absence of flex-fuel vehicles in the market. OMCs emphasized the need for a significant price differential to encourage consumer adoption and called for a clear roadmap from automakers before investing in flex-fuel infrastructure." datetime: "2026-04-03T10:08:40.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/281655777.md) - [en](https://longbridge.com/en/news/281655777.md) - [zh-HK](https://longbridge.com/zh-HK/news/281655777.md) --- # OMCs raise red flag over viability of flex fuels, pricing structure State-run oil-marketing companies (OMCs) have raised concern over the viability of dispensing flex fuels through their retail outlets, pointing to the lack of a meaningful price difference between flex fuel and E20 despite the former’s lower calorific value, which directly impacts vehicle mileage. Flex fuel refers to petrol blended with higher proportions of ethanol, such as E93 or E100, where the number indicates the percentage of ethanol in the fuel. E20 is the standard petrol-ethanol blend now being sold at pumps across India. Calorific value is the energy contained in a fuel. India imports more than 85 per cent of its crude oil, while ethanol is manufactured locally from agricultural sources such as sugarcane. The government, therefore, sees wider ethanol use as a way to reduce the import of crude oil. During a meeting on February 28, Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation, apart from raising concern over the lack of price difference between E20 and flex fuels, also pointed to minuscule demand seen in earlier pilot projects, where E93 fuel was supplied at about 500 outlets in 2024. They further raised concern over the absence in India of models of vehicles that run on flex fuel and the lack of a clear timeline for their launch, Business Standard has learnt. The February 28 meeting was convened by the Ministries of Petroleum and Natural Gas (MoPNG) and Heavy Industries (MHI) against the backdrop of the West Asia war, which has disrupted supplies of oil and gas all over the world and pushed up fuel prices. Society of Indian Automobile Manufacturers (Siam) and select automakers too were present. The meeting was aimed at finalising timelines for the rollout of vehicles that run on flex fuel, assessing the readiness of fuel-retail infrastructure to dispense higher ethanol blends and ensuring adequate fuel availability. However, OMCs referred to their previous experience to underline the challenges. In 2024, the three companies had jointly rolled out a pilot project to dispense E93 fuel at around 500 retail outlets. The initiative saw almost no consumer demand because flex-fuel vehicles specifically designed to run on such high ethanol blends are not yet available in the Indian market. Indian Oil Corporation, in particular, said it had supplied E93 fuel across 402 outlets between February and April 2024 in states including Maharashtra, Tamil Nadu, Uttar Pradesh, Karnataka, and Delhi. Yet, sales were recorded at only four outlets, and even there the fuel was used largely by automakers for engine testing rather than by retail customers. This lack of demand meant that investment made by OMCs in developing infrastructure for dispensing higher ethanol blends yielded little return, raising questions about the commercial viability of scaling up such operations without assured vehicle availability. The OMCs also informed the meeting about the structural issues related to pricing, especially the tax treatment of E100. They said ethanol was procured from distilleries at relatively high prices (around ₹71 per litre, according to the government data released in August last year). Under the current tax structure, E100 attracts a goods and services tax (GST) of 18 per cent, compared to 5 per cent on E20. Once this higher tax, along with blending costs, market-linked prices of co-solvents, and dealer margins are added, the retail price of E100 approaches that of E20. “This creates a fundamental mismatch for consumers. E100 has a lower calorific value, meaning it releases less energy when burned compared to petrol. In practical terms, this results in lower mileage because vehicles running on higher ethanol blends travel fewer kilometres per litre. Why would a customer opt for a flex-fuel vehicle, which is more expensive than a comparable E20 vehicle, and then use a fuel that delivers lower mileage? Even if a customer buys such a vehicle, they are likely to continue using E20 to get better mileage,” an OMC executive said. The OMCs told the meeting that consumers were unlikely to shift to flex fuels unless there was a significant price differential to offset the lower energy content. They also sought clarity from automakers on their rollout plans, noting that their experience from the 2024 pilot showed infrastructure creation without corresponding vehicle availability led to underutilisation. A clear and credible road map from original equipment manufacturers is, therefore, critical before OMCs commit fresh investment in expanding flex-fuel dispensing infrastructure. Queries sent to the MoPNG, the MHI, Siam, and the three oil firms by Business Standard remained unanswered. - Pilot projects in 2024 showed minuscule demand for E93 across retail outlets - Currently, there is barely any price gap between E100 and E20 - There is higher GST of 18% on E100 compared to 5% on E20 - E100’s lower calorific value results in significantly lower vehicle mileage - No flex fuel vehicles in India yet, automakers lack clear launch timeline ### Related Stocks - [EP.US](https://longbridge.com/en/quote/EP.US.md) - [ODC.US](https://longbridge.com/en/quote/ODC.US.md) - [OILCF.US](https://longbridge.com/en/quote/OILCF.US.md) - [XLE.US](https://longbridge.com/en/quote/XLE.US.md) - [OIS.US](https://longbridge.com/en/quote/OIS.US.md) - [IXC.US](https://longbridge.com/en/quote/IXC.US.md) - [IEO.US](https://longbridge.com/en/quote/IEO.US.md) - [CWPE.US](https://longbridge.com/en/quote/CWPE.US.md) - [XOP.US](https://longbridge.com/en/quote/XOP.US.md) - [BPMP.US](https://longbridge.com/en/quote/BPMP.US.md) ## Related News & Research - [Market Chatter: BP Whiting Refinery Negotiations Stalled, Union Says](https://longbridge.com/en/news/286233825.md) - [US, European banks interested in financing loans for oil company Petroperu](https://longbridge.com/en/news/286323816.md) - [BUZZ-Fervo Energy surges 37% in electric New York debut](https://longbridge.com/en/news/286296665.md) - [EXCLUSIVE-Mexico's Pemex CEO, close ally of Sheinbaum, under threat as woes mount](https://longbridge.com/en/news/286236835.md) - [BUZZ-Fervo Energy set to debut above offer price after upsized $1.89 bln IPO](https://longbridge.com/en/news/286277153.md)