As the April 1, 2020 deadline for transition to BS6 emission norms nears, here is some good news for automobile users. State-owned Bharat Petroleum Corporation Limited (BPCL), which has over 15,400 fuel stations in its kitty, will be BS6-ready at nozzle level from March 1. The company will be starting its final leg of preparation from Wednesday or Thursday. The government-mandated new fuel emission deadline is from April 1.
R. Ramachandran, Director (Refinery) at BPCL said, "We are through with what we had to," while commenting on the preparedness level of the new emission norms which India is leapfrogging to.
Earlier this month, the country’s largest fuel retailer, Indian Oil Corporation (IOCL) claimed that more than 15,000 fuel retail centres, out of the total 27,000 in the country, are ready to dispense BS6 fuel at nozzle level. That works out to 55 percent of the fuel stations; the remaining ones are expected to be ready by early to mid-March.
Speaking at Global Electrification Mobility Summit, on the sidelines of Auto Expo 2020 in New Delhi, Dr SSV Ramakumar, director (R&D) and board member, Indian Oil Corporation, had said that 10 out of the total 11 refineries operated by IOCL are now ready to provide BS6-grade fuel.
Interestingly, India's oldest refinery, and also one of the oldest operating refinery in the world at Digboi, was the first to produce fuel for the BS6 era. Indian Oil accounts for nearly half of India's petroleum products market share, with sales of about 90 million tonnes in 2018-2019. The company has more than 27,700 fuel stations (petrol pumps) across the country.
Will the increase in price pass on to consumers?
The industries executives claim that they are in discussion with the government over helping them (oil marketing companies) recover their investment for BS6 upgradation. According to industry insiders, state-owned oil marketing companies (OMCs) have invested around Rs 29,000 crore so far just for upgrading the refineries to produce cleaner BS6 fuels. While BPCL has invested over Rs 7,000 crore, IOCL has made a capital expenditure of around Rs 16,000- 16,500 crore. Hindustan Petroleum Corporation Limited (HPCL), on the other hand, has invested about Rs 5,000 crore for upgrading the refineries for BS6 fuels.
For BPCL, the entire upgradation has resulted in a price hike in its fuel, between 70 paise to Re 1 per litre. “We hope that this is built up in the retail price,” said a BPCL executive. The same executive said that this can be done with the government's mandate by way of cess, or a VGF, for a certain period of time. “However, it may not happen immediately as the market will find its own level of pricing at some time” the executive continued.
India could leverage from Coronavirus
According to Ramachandran, India should take advantage of the falling crude prices caused due to the Coronavirus outbreak. The excess crude supply is now available at a much cheaper rate, which will eventually lead to cheaper fuel for the end consumer.