BUSINESS

BS VI fuel cess may be on cards

Black gold:OMCs want to recover investments by levying cess of Rs. 0.70 paise to Rs. 1 on every litre of petrol, diesel.V. Raju

Black gold:OMCs want to recover investments by levying cess of Rs. 0.70 paise to Rs. 1 on every litre of petrol, diesel.V. Raju  

Refiners want to recover Rs. 35,000 crore invested in upgrading units

Even as India is gearing up to switch over to the world’s cleanest fuel from April 1, 2020, Indian OMCs (oil marketing companies) have made a representation to the government to recover about Rs. 35,000 crore invested in upgrading their refineries to produce BS VI fuel.

The OMCs plan to recover this money by imposing a cess Rs. 0.70 to Rs. 1 on every litre of petrol and diesel.

When asked for comments, R. Ramachandran, director (refineries) at Bharat Petroleum Corporation Ltd. (BPCL) told The Hindu, “Our (OMCs) aspiration is that we should be compensated to tune of Rs. 0.70 to Rs. 1.30 on every litre of BS VI fuel sold. This should be built into the final retail price of the fuel.

“We are engaging with the government for an assurance that we will be allowed to recover the investments made in upgrading our refineries to BS VI over a period of time. This may be in the form of a cess.”

BPCL alone has invested about Rs. 7,000 crore in upgrading its refineries to produce BS VI-compliant fuels.

Sulphur content

India adopted Euro-III equivalent (or Bharat Stage-III) fuel with a sulphur content of 350 ppm in 2010 and then took seven years to move to BS IV that had a sulphur content of 50 ppm. Transition from BS IV to BS VI took just three years. In, BS VI, petrol and diesel contain just 10 parts per million (ppm) of sulphur.

“All our refineries are already producing BS VI fuels and it’s being sold at many retail outlets now. Today, there is no extra pricing as there is no recognition in the market. We have made industry representation to the government to recover the money. Any life cycle of a project is minimum 15 years and a reasonable payback period is 8 years,” said the director of an OMC.

When asked why the OMCS were seeking government nod for recovering the investments when prices of petrol and diesel had been de-regulated, a senior OMC official told The Hindu , “[The] Government still continues to be the majority shareholder of the companies.”

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