The Union Ministry of Petroleum and Natural Gas has written a letter to the Punjab government requesting a reconsideration of the fees imposed under the state’s excise policy on ethanol production, reported The Indian Express.
The letter, was written on April 8 by Praveen M Khanooja, Additional Secretary in the petroleum ministry, addressed to Punjab Chief Secretary KAP Sinha.
It highlights that the imposition of a Regulatory Fee (Ethanol Permit/Pass fee) in the Excise Policy 2025-26 could hinder the free movement of ethanol within and outside Punjab, potentially raising the cost of ethanol-blended petrol.
The letter reads that it has been brought to the Ministry’s notice by Oil Marketing Companies (OMCs) that as per the excise policy of Punjab state, there is a substantial increase in the license fee, annual renewal fee and capacity enhancement fee for Distilleries (Part D, Para 6 a & b of Punjab’s Excise Policy). Also, Para 29 ‘Regulatory fee on ethanol’ of the Policy makes a provision to levy Regulatory Fee (Ethanol Permit/Pass fee) @ Rs. 1 per Bulk Litre.
The ministry emphasized that the central government has been actively promoting ethanol blending in petrol to support domestic agriculture and environmental benefits.
“Ethanol blending has increased from 1.5% to over 18% in the last decade, with the country aiming for a 20% target by Ethanol Supply Year (ESY) 2025-26. Punjab has contributed significantly by achieving 18.8% blending in ESY 2024-25 as of March 2025,” the letter states.
It further mentions that Punjab is expanding distillation capacity and setting up dedicated ethanol plants, which generate employment and support a circular economy.
Khanooja shows concern that the higher fees in the 2025-26 excise policy could raise the cost of ethanol-blended petrol, jeopardizing the viability of ethanol producers, suppliers, and OMCs. The regulatory fee could also restrict ethanol’s free movement, further increasing costs, as per the news report.
The petroleum ministry official urged the Chief Secretary to review the excise policy and reconsider any fees on ethanol production/consumption/transport to ensure smooth distribution of ethanol, benefiting both the environment and farmers.
