The government's move to make it mandatory for oil marketing companies (OMCs) to blend 5 percent ethanol in petrol may raise the price of the auto fuel, media reports suggest.

The price of petrol may rise by at least 1 per litre by the end of May because of shortage of ethanol in the country. Owing to paucity of ethanol, retailers may have to import the biofuel from abroad at a time when rupee is depreciating. This may raise the cost of blended petrol, reports suggest.  

Last year, the union cabinet made sale of 5 percent ethanol blended petrol mandatory from June 2013. The government allowed oil companies to negotiate price with domestic and overseas suppliers of the biofuel.

Some reports suggest that the cabinet may reconsider the issue and may waive the mandatory blending norm taking into consideration its impact on price level.

The oil ministry has circulated a cabinet note recently on compulsory blending of ethanol with petrol, highlighting the fact that this would force oil companies to import over two-third of 105 crore litre of the biofuel at higher rates, reports suggest.

The government made blending of ethanol compulsory in order to reduce the crude oil import bill of the country as well as cut carbon dioxide and carbon monoxide emissions by around 15 percent.