Oil companies switch to BS-VI fuel without increasing prices; rate hike due to high state VAT: COI

NEW DELHI: India has switched to the world's cleanest gasoline and diesel without raising prices, India Petroleum Corp (IOC), the country's largest oil firm, said Thursday.

Jumping from BS-IV fuel grade directly to BS-VI grade, equivalent to Euro-VI fuel, gasoline and diesel would have resulted in an increase of up to 1 Re per liter in cost, but the oil companies decided not to pass this on to consumers and instead adjusted it against the reduction guaranteed by the International oil prices plummeted to a low of 17 years.

The IOC also said that gasoline and diesel prices have not increased even though costs have increased significantly.

Increased fuel prices in some states like Maharashtra, Karnataka & west of bengal about 1 Re per liter each since April 1 was due to the increase in the state sales tax or VAT rates, he said.

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PTI had on Wednesday reported that oil companies will not raise prices while supplying BS-VI grade fuel.

In a statement, IOC said public sector oil firms had incurred about Rs 35,000 crore in upgrading their countrywide refineries, pipelines & marketing distribution network to be able to supply petrol & diesel with 10 parts per million (ppm) of sulphur as against 60 ppm in BS-IV fuels earlier.

"Taking into consideration the CAPEX costs & the likely incremental OPEX costs, there would be some impact on the retail selling price of petrol & diesel," it said.

"Considering the current crisis brought on by the COVID-19 pandemic, the oil marketing companies (OMCs) have kept the prices of petrol & diesel unchanged with effect from 1st April 2020, which were otherwise also being maintained steady."

It further stated that while the prices of petrol & diesel have remained unchanged at Rs 69.59 per litre & Rs 62.29 respectively, rates in Kolkata & Mumbai have gone up by Re 1 a litre each because of hike in VAT rates.

Rates have not changed in Chennai.

Petrol in Mumbai now costs Rs 76.31 & diesel Rs 66.21 while in Kolkata a litre of petrol comes for Rs 73.30 & diesel is priced at Rs 65.62 per litre.

"In view of the extremely volatile situation, the OMCs are keeping a close watch on global cues & the market scenario while taking pricing decisions," the statement said.

Petroleum companies have not changed petrol & diesel price for over a fortnight now as they first adjusted the reduction warranted against the Rs 3 per litre increase in excise duty & now are setting off the increased cost of BS-VI fuel.

Petrol & diesel rates were last revised on March 16.

The switch over from BS-IV to BS-VI was achieved in just three years, a feat not seen in any of the large economies around the globe.

India will join the select league of nations using petrol & diesel containing just 10 parts per million of sulphur as it looks to cut vehicular emissions that are said to be one of the reasons for the choking pollution in major cities.

India adopted Euro-III equivalent (or Bharat Stage-III) fuel with a sulphur content of 350 ppm in 2010 & then took seven years to move to BS-IV that had a sulphur content of 50 ppm.

From BS-IV to BS-VI it took just three years.

India adopted a fuel up-gradation programme in the early 1990s. Low lead gasoline (petrol) was introduced in 1994 in Delhi, Mumbai, Kolkata, & Chennai. On February 1, 2000, unleaded gasoline was mandated nationwide.

Similarly, BS-2000 (Euro-I equivalent, BS-1) vehicle emission norms were introduced for new vehicles from April 2000. BS-II (Euro-II equivalent) emission norms for new cars were introduced in Delhi from 2000 & extended to the other metro cities in 2001.

Benzene limits have been reduced progressively from 5 per cent in 2000 to 1 per cent nationwide. Lead content in gasoline was removed in phases & only unleaded gasoline is being produced & sold from February 1, 2000.

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