Centre flags ethanol levy as threat to green fuel mission, urges Punjab, Haryana, Himachal to reconsider fees

New Indian Express

14-06-2025

CHANDIGARH: The Union Ministry of Petroleum and Natural Gas has written to the governments of Punjab, Haryana and Himachal Pradesh, urging them to reconsider the fee levied on ethanol production in their respective excise policies, warning that the move may hamper the ethanol blending programme and escalate fuel prices.
The ministry, in its letters to these state governments, stated that the provision to levy a Regulatory Fee (Ethanol Permit/Pass) in their excise policies could restrict the free movement of ethanol within and outside the states. This, it noted, would ultimately increase the cost of ethanol-blended petrol.
The letters were addressed individually by Additional Secretary in the Union Ministry of Petroleum and Natural Gas, Parveen M Khanooja. The letter to Himachal Pradesh Chief Secretary Prabodh Saxena was sent on March 27, followed by a letter to Punjab Chief Secretary KAP Sinha on April 8, and another to Haryana Chief Secretary Anurag Rastogi on May 23. This newspaper has copies of all three letters.
Interestingly, of the three states, Punjab has an Aam Aadmi Party (AAP) government, Himachal Pradesh is governed by the Congress, while Haryana is ruled by the BJP.
'It has been brought to the ministry's notice by oil marketing companies (OMCs) that as per the excise policy 2025–27 of Haryana state, there is a substantial increase in the licence fee/annual renewal fee for distilleries. Also, the aforesaid policy has introduced a fee of Rs 1 per bulk litre (BL) for issuance of pass for ethanol for mixing in petrol for use as automobile fuel."
"Additionally, an import duty of Rs 1.20 per bulk litre has also been levied. Given that ethanol is already subject to Goods and Services Tax (GST), imposing an additional excise duty would constitute double taxation, which runs contrary to sound taxation principles and could be legally untenable, especially for a production crucial to a national programme like the ethanol blended petrol programme.
"Furthermore, the increased costs resulting from the proposed fees and duty in excise policy 2025–27 are likely to raise the price of ethanol-blended petrol. Haryana and Punjab appear to be the sole states where such levies on ethanol specifically meant for blending with petrol have been imposed,' states the letter written to Rastogi by Khanooja.