Bhutan turns down E20 petrol from Indian OMCs? Here's the science behind its decision
Ethanol is hygroscopic, meaning it readily absorbs moisture from the atmosphere. This makes its storage more demanding than conventional petrol. If water enters storage tanks, ethanol-blended fuel can separate into different layers, reducing quality and affecting engine performance.
- Jul 3, 2026,
- Updated Jul 3, 2026 10:18 PM IST
While India is making giant leaps on its green energy transition with its ambitious ethanol-blending programme, the same enthusiasm has hit a road bump beyond its borders. Bhutan has declined an offer from Indian Oil Marketing Companies (OMCs) to supply E20 petrol.
According to local media reports, the Himalayan kingdom has said its fuel storage infrastructure is inadequate to safely handle ethanol-blended fuel, highlighting how geography and infrastructure can shape energy policy just as much as environmental goals.
India has accelerated its ethanol blending programme to reduce crude oil imports, lower emissions and support domestic biofuel production. The E20 petrol variant contains 20% ethanol and is now rolled out widely across the country as part of it's clean fuel transition.
Why Bhutan rejected E20 petrol
According to a report by The Bhutanese, the issue is not opposition to cleaner fuels but the practical challenge of storing them safely. Ethanol is hygroscopic, meaning it readily absorbs moisture from the atmosphere. This property makes storage significantly more demanding than conventional petrol. If water enters storage tanks, ethanol-blended fuel can separate into different layers, reducing fuel quality and potentially affecting engine performance.
MUST READ | Centre denies reports claiming E20 programme was termed an ‘experiment’ before Supreme Court
Bhutan says this is particularly problematic because many of its fuel storage facilities are located in mountainous regions where seepage and moisture intrusion are difficult to eliminate. Storage tanks in such terrain are more susceptible to water contamination, increasing the risk of fuel degradation before it even reaches consumers. The concerns were highlighted by officials familiar with the discussions, as cited by The Bhutanese.
Workshop data cited by the publication suggests that owners of incompatible vehicles could face additional annual repair costs of around ₹5,000 to ₹10,000 for replacement parts and specialised fuel additives to manage moisture build-up.
Infrastructure before transition
The development underlines an often-overlooked aspect of the global shift towards cleaner fuels: infrastructure readiness.
DON'T MISS | Govt waives excise duty on petrol with higher levels of ethanol
While India has invested heavily in expanding ethanol production and adapting its fuel supply chain, neighbouring Bhutan would need to upgrade storage tanks, fuel depots and handling systems before it can safely adopt higher ethanol blends. Until then, conventional petrol remains the more practical option.
The decision also illustrates that fuel transitions cannot follow a one-size-fits-all model. Countries with challenging terrain, smaller fuel networks or older infrastructure may require different timelines, even if they support the broader objective of reducing fossil fuel dependence.
What it means for India
For India, Bhutan's response is unlikely to affect the overall ethanol programme, which is driven primarily by domestic demand. However, it offers an important lesson for future regional energy cooperation.
DO CHECKOUT | Petrol, EV or Flex-Fuel? Here's which car makes most sense for your road trips in 2026
As India expands exports of cleaner fuels and promotes energy integration with neighbouring countries, infrastructure compatibility may become just as important as fuel availability. A blend designed for one country's storage and distribution network may not be immediately suitable for another without significant investment.
The report by The Bhutanese also noted that while countries such as Brazil subsidise high-ethanol fuels to compensate for their lower energy content and reduced mileage, E20 petrol in India is generally sold at prices comparable to regular petrol. As a result, consumers may pay the same price despite potentially travelling fewer kilometres per litre, while also incurring higher maintenance costs in older vehicles.
The publication further pointed out that India has moved more rapidly than many other markets in expanding ethanol-blended fuels. With E20 becoming the standard and higher blends such as E85 under consideration, it said vehicle owners planning to keep older cars for the long term face growing uncertainty.
Unlike several international markets, where motorists can choose lower ethanol blends such as E5 or E10 — or even pure petrol — from separate dispensing nozzles, Indian fuel stations largely supply the standard blended fuel.
While India is making giant leaps on its green energy transition with its ambitious ethanol-blending programme, the same enthusiasm has hit a road bump beyond its borders. Bhutan has declined an offer from Indian Oil Marketing Companies (OMCs) to supply E20 petrol.
According to local media reports, the Himalayan kingdom has said its fuel storage infrastructure is inadequate to safely handle ethanol-blended fuel, highlighting how geography and infrastructure can shape energy policy just as much as environmental goals.
India has accelerated its ethanol blending programme to reduce crude oil imports, lower emissions and support domestic biofuel production. The E20 petrol variant contains 20% ethanol and is now rolled out widely across the country as part of it's clean fuel transition.
Why Bhutan rejected E20 petrol
According to a report by The Bhutanese, the issue is not opposition to cleaner fuels but the practical challenge of storing them safely. Ethanol is hygroscopic, meaning it readily absorbs moisture from the atmosphere. This property makes storage significantly more demanding than conventional petrol. If water enters storage tanks, ethanol-blended fuel can separate into different layers, reducing fuel quality and potentially affecting engine performance.
MUST READ | Centre denies reports claiming E20 programme was termed an ‘experiment’ before Supreme Court
Bhutan says this is particularly problematic because many of its fuel storage facilities are located in mountainous regions where seepage and moisture intrusion are difficult to eliminate. Storage tanks in such terrain are more susceptible to water contamination, increasing the risk of fuel degradation before it even reaches consumers. The concerns were highlighted by officials familiar with the discussions, as cited by The Bhutanese.
Workshop data cited by the publication suggests that owners of incompatible vehicles could face additional annual repair costs of around ₹5,000 to ₹10,000 for replacement parts and specialised fuel additives to manage moisture build-up.
Infrastructure before transition
The development underlines an often-overlooked aspect of the global shift towards cleaner fuels: infrastructure readiness.
DON'T MISS | Govt waives excise duty on petrol with higher levels of ethanol
While India has invested heavily in expanding ethanol production and adapting its fuel supply chain, neighbouring Bhutan would need to upgrade storage tanks, fuel depots and handling systems before it can safely adopt higher ethanol blends. Until then, conventional petrol remains the more practical option.
The decision also illustrates that fuel transitions cannot follow a one-size-fits-all model. Countries with challenging terrain, smaller fuel networks or older infrastructure may require different timelines, even if they support the broader objective of reducing fossil fuel dependence.
What it means for India
For India, Bhutan's response is unlikely to affect the overall ethanol programme, which is driven primarily by domestic demand. However, it offers an important lesson for future regional energy cooperation.
DO CHECKOUT | Petrol, EV or Flex-Fuel? Here's which car makes most sense for your road trips in 2026
As India expands exports of cleaner fuels and promotes energy integration with neighbouring countries, infrastructure compatibility may become just as important as fuel availability. A blend designed for one country's storage and distribution network may not be immediately suitable for another without significant investment.
The report by The Bhutanese also noted that while countries such as Brazil subsidise high-ethanol fuels to compensate for their lower energy content and reduced mileage, E20 petrol in India is generally sold at prices comparable to regular petrol. As a result, consumers may pay the same price despite potentially travelling fewer kilometres per litre, while also incurring higher maintenance costs in older vehicles.
The publication further pointed out that India has moved more rapidly than many other markets in expanding ethanol-blended fuels. With E20 becoming the standard and higher blends such as E85 under consideration, it said vehicle owners planning to keep older cars for the long term face growing uncertainty.
Unlike several international markets, where motorists can choose lower ethanol blends such as E5 or E10 — or even pure petrol — from separate dispensing nozzles, Indian fuel stations largely supply the standard blended fuel.