**Executive Summary**
This report addresses the impact of maintaining stable petrol and diesel prices, steps to meet increasing natural gas demand and reduce import dependence, and plans to attract private investment for alternative energy sources like green hydrogen. It details government interventions, excise duty adjustments, and various initiatives aimed at ensuring energy affordability and security. The report mentions the status of ethanol blending targets as of October 2025. The response was provided to Lok Sabha Unstarred Question No. 3106, answered on December 18, 2025.
**Key Points / Main Content**
* **Petrol and Diesel Pricing and Interventions:**
* Petrol and diesel pricing is market-determined, but the government intervenes to mitigate the impact of global oil price fluctuations.
* Central excise duty was reduced in two tranches in November 2021 and May 2022 (Rs. 13/litre on petrol and Rs. 16/litre on diesel), fully passed on to consumers.
* Some State Governments reduced state VAT rates.
* OMCs reduced retail prices by Rs. 2/litre each in March 2024.
* Excise duty increased by Rs. 2/litre each in April 2025 but not passed to consumers.
* Intra-state freight rationalisation was implemented to benefit consumers in remote areas.
* **Natural Gas Demand and Import Reduction:**
* The government is promoting the use of alternate fuels like CNG, LNG, Hydrogen, biofuels, and electric vehicles.
* National Policy on Biofuels - 2018 targets 20% ethanol blending in petrol and 5% biodiesel in diesel by 2030.
* Advanced the target of 20% blending of ethanol in petrol from 2030 to 2025-26. Public Sector OMCs achieved 19.24% during Ethanol Supply Year (ESY) 2024-25 and 19.97% in October 2025.
* Various programs such as Ethanol Blended Petrol (EBP), Biodiesel blending, and Sustainable Alternative towards Affordable Transportation (SATAT) initiatives are underway.
* **Boosting Domestic Oil and Gas Production:**
* Various policies have been introduced to boost domestic oil and gas production, including:
* Policy under PSC regime for early monetization of hydrocarbon discoveries, 2014.
* Discovered Small Field Policy, 2015.
* Hydrocarbon Exploration and Licensing Policy (HELP), 2016.
* Policy for Extension of PSCs, 2016 and 2017.
* Policy for early monetization of Coal Bed Methane, 2017.
* Setting up of National Data Repository, 2017.
* Appraisal of Un-appraised areas in Sedimentary Basins under National Seismic Programme, 2017.
* Policy framework for extension of PSCs for Discovered Fields and Exploration Blocks under Pre-New Exploration Licensing Policy (Pre-NELP), 2016 and 2017.
* Policy to Promote and Incentivize Enhanced Recovery Methods for Oil and Gas, 2018.
* Policy Framework for exploration and exploitation of Unconventional Hydrocarbons under Existing Production Sharing Contracts (PSCs), Coal Bed Methane (CBM) Contracts and Nomination Fields, 2018.
* Natural Gas Marketing Reforms, 2020.
* Lower Royalty Rates, Zero Revenue Share (till Windfall Gain) and no drilling commitment in Phase-I in OALP Blocks under Category II and III basins to attract bidders.
* Release of about 1 Million Sq. Km. (SKM) ‘No-Go' area in offshore which were blocked for exploration for decades.
* The government is spending about Rs.7500 Cr. for acquisition of seismic data.
* **Attracting Private Investment in Alternative Energy:**
* National Green Hydrogen Mission (NGHM) launched by the Ministry of New and Renewable Energy (MNRE) to make India a global hub for green hydrogen.
* NGHM targets Green Hydrogen production capacity of 5 Million Metric Tonnes (MMT) per annum by 2030.
* Strategic Interventions for Green Hydrogen Transition (SIGHT) provides financial incentives for green hydrogen production.
**Impact Analysis**
**Public Sector Oil Marketing Companies (OMCs)**
* **Impact**: OMCs are impacted by the government's decisions on pricing and excise duties, which affect their financial health. They are also involved in implementing various blending and biofuel programs.
* **Action Required**: Need to align their operations with government policies on pricing, biofuel blending, and alternative fuels.
**Consumers**
* **Impact**: Consumers benefit from stable prices, reduced excise duties, and the availability of affordable energy through alternative fuels and blending programs.
* **Action Required**: Adopt alternative fuels and energy-efficient practices to benefit from government initiatives.
**Investors**
* **Impact**: Opportunities for investment in alternative energy sources, particularly green hydrogen production and related technologies.
* **Action Required**: Explore investment opportunities in green hydrogen and other alternative energy projects supported by government incentives.
Key Entities Referenced
National Policy on Biofuels - 2018: Policy outlining indicative targets for blending ethanol and biodiesel in petrol and diesel.
Ethanol Blended Petrol (EBP) Programme: Program to promote the use of biofuels by blending petrol with ethanol.
National Green Hydrogen Mission (NGHM): Mission by Ministry of New and Renewable Energy aiming to make India a global hub for green hydrogen production, usage and export.
Hydrocarbon Exploration and Licensing Policy (HELP), 2016: Policy to boost domestic oil and gas production.
Ministry of Petroleum and Natural Gas: The central ministry responsible for matters related to petroleum and natural gas.
LOK SABHA
UNSTARRED QUESTION NO. 3106
TO BE ANSWERED ON 18 DECEMBER, 2025
Impact of Long-Standing Stability in Petrol and Diesel Prices
†3106. SHRI TARIQ ANWAR:
पेट(cid:332)ोिलयम और (cid:366)ाकृ ितक गैस मं(cid:361)ी
Will the Minister of PETROLEUM AND NATURAL GAS be pleased to state:
(a) the impact of maintaining long-term stability in petrol and diesel prices on the financial
health of Public Sector Oil Marketing Companies (OMCs);
(b) the steps being taken by the Government to meet the increasing demand for natural gas
(CNG/PNG) and to reduce import dependence; and
(c) the plan to attract private investment for the development of alternative energy sources such
as green hydrogen?
ANSWER
पेट(cid:332)ोिलयम और (cid:366)ाकृ ितक गैस मं(cid:361)ालय म(cid:336) रा(cid:475) मं(cid:361)ी
((cid:373)ी सुरेश गोपी)
MINISTER OF STATE IN THE MINISTRY OF PETROLEUM AND NATURAL GAS
(SHRI SURESH GOPI)
(a) to (c): Pricing of petrol and diesel in the country is market-determined and OMCs take
appropriate decision on pricing of petrol and diesel. However, the Government remains sensitive
to the impact of global oil price fluctuations. Calibrated interventions have been undertaken -
such as reductions in central excise duties. For instance, Government reduced the Central Excise
duty by a total of Rs. 13/litre and Rs. 16/litre on petrol and diesel respectively in two tranches in
November 2021 and May 2022, which was fully passed on to consumers. Some State
Governments also reduced state VAT rates to provide relief to citizens. In March, 2024, OMCs
reduced the retail prices of petrol and diesel by Rs. 2 per litre each. In April 2025, excise duty on
Petrol and Diesel was increased by Rs. 2 per litre each but this was not passed on to consumers.
PSU OMCs recently carried out an intra-state freight rationalisation. This has benefitted
consumers located at remote areas, far from Petroleum Oil & Lubricants (POL) Depots in the
form of reduced Petrol and Diesel prices in remote parts within the states. This initiative has also
reduced the difference between the maximum and minimum retail prices of Petrol or Diesel
within a state.
Government also took several other steps to insulate common citizens from high international
prices, which included diversifying the crude import basket, invoking the provisions of Universal
Service Obligation to ensure availability of petrol & diesel in domestic market, increasing the
blending of ethanol in petrol, etc.
Government is committed towards security, affordability and accessibility of energy for every
citizen. To achieve these objectives Government is promoting usage of alternate fuels like CNG,
LNG, Hydrogen, biofuels including ethanol, electric vehicles, etc.
Government notified the National Policy on Biofuels - 2018 which laid out indicative target of
20% blending of ethanol in petrol and 5% blending of biodiesel in diesel by 2030 in the country.Subsequently, Government advanced the target of 20% blending of ethanol in petrol from 2030
to 2025-26. During the ongoing Ethanol Supply Year (ESY) 2024-25, Public Sector OMCs have
achieved the average blending percentage of 19.24%. During the month of October, 2025,
Ethanol blending of 19.97% has been achieved.
To promote the use of biofuels, various programmes such as Ethanol Blended Petrol (EBP)
Programme, wherein Oil Marketing Companies (OMCs) sell petrol blended with ethanol,
Biodiesel blending programme wherein biodiesel is blended with diesel, Sustainable Alternative
towards Affordable Transportation (SATAT) initiative wherein Compressed Bio Gas (CBG) is
marketed along with Compressed Natural Gas (CNG) have been taken up.
For Biofuel production across the country including rural India, the Government has taken steps
on pricing, incentives, opened alternate route for ethanol production, notified Pradhan Mantri JI-
VAN Yojana for setting up second generation ethanol bio-refineries based on agri residues for
ethanol production, SATAT initiative for production of CBG and bio-manure from various
waste / biomass sources, notified interest subvention scheme for enhancement and expansion of
ethanol distillation capacity etc.
Government has been taking various steps to boost domestic oil and gas production which, inter-
alia, include:
i. Policy under PSC regime for early monetization of hydrocarbon discoveries, 2014.
ii. Discovered Small Field Policy, 2015.
iii. Hydrocarbon Exploration and Licensing Policy (HELP), 2016.
iv. Policy for Extension of PSCs, 2016 and 2017.
v. Policy for early monetization of Coal Bed Methane, 2017.
vi. Setting up of National Data Repository, 2017.
vii. Appraisal of Un-appraised areas in Sedimentary Basins under National Seismic
Programme, 2017.
viii. Policy framework for extension of PSCs for Discovered Fields and Exploration Blocks
under Pre-New Exploration Licensing Policy (Pre-NELP), 2016 and 2017.
ix. Policy to Promote and Incentivize Enhanced Recovery Methods for Oil and Gas, 2018.
x. Policy Framework for exploration and exploitation of Unconventional Hydrocarbons
under Existing Production Sharing Contracts (PSCs), Coal Bed Methane (CBM)
Contracts and Nomination Fields, 2018.
xi. Natural Gas Marketing Reforms, 2020.
xii. Lower Royalty Rates, Zero Revenue Share (till Windfall Gain) and no drilling
commitment in Phase-I in OALP Blocks under Category II and III basins to attract
bidders.
xiii. Release of about 1 Million Sq. Km. (SKM) ‘No-Go’ area in offshore which were blocked
for exploration for decades.
xiv. Government is also spending about Rs.7500 Cr. for acquisition of seismic data in onland
and offshore areas and drilling of stratigraphic wells to make quality data of Indian
Sedimentary Basins available to bidders. Government has approved acquisition of
additional 2D Seismic data of 20,000 LKM in onland and 30,000 LKM in offshore
beyond Exclusive Economic Zone (EEZ) of India.
National Green Hydrogen Mission (NGHM) has been launched by Ministry of New and
Renewable Energy (MNRE), Government of India, with an objective to make India a global hub
of production, usage and export of green hydrogen and its derivatives.
NGHM targets Green Hydrogen production capacity of 5 Million Metric Tonnes (MMT) per
annum by 2030.
Strategic Interventions for Green Hydrogen Transition (SIGHT) is a key component of the
Mission which provides financial incentives for production of green hydrogen and electrolyser
manufacturing.
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