Rs 80,000 Crore: What Indian Oil Refineries Need To Spend To Produce Cleaner Fuel

07/05/2015 7:18 PM IST | Updated 15/07/2016 8:25 AM IST
JACK GUEZ via Getty Images
A general view shows an oil refinery, in Israel's third city of Haifa on April 20, 2015, after the city's Mayor Yona Yahav ordered municipal rubbish trucks to block access to four chemical plants and a refinery after warnings linking high cancer rates in the area to air pollution. The standoff began after a senior health ministry official said last week that 16 percent of cancer cases in the Haifa Bay area could be attributed to air pollution. AFP PHOTO / JACK GUEZ (Photo credit should read JACK GUEZ/AFP/Getty Images)

NEW DELHI — Cleaner fuel will not be cheap for oil refineries. A parliament report says it will cost Indian refining companies Rs 80,000 crore to upgrade petrol and diesel quality to meet Euro IV norms by 2020.

Petrol and diesel meeting Euro-IV or Bharat Stage (BS)-IV specifications are to be supplied throughout the country by April 2017 and BS-V grade fuel by April 1, 2020, said the report of the Standing Committee on Petroleum and Natural Gas tabled in Parliament today.

While BS-IV fuel is to be supplied throughout the country in phases by April 1, 2017, the Oil Ministry is considering a proposal to switch over directly from BS-IV to BS-VI auto fuels by April 1, 2020 instead of stepwise upgradation from BS-IV to BS-V and then BS-V to BS-VI. That would make India in line with more stringent western norms.

BS-IV petrol and diesel contain 50 parts per million (ppm) sulphur, BS-V and BS-VI grade fuel will have 10 ppm sulphur.

"In order to meet the fuel quality in line with the Auto Fuel Policy 2003, the oil refineries had upgraded its technology and invested over Rs 35,000 crore for production and supply of BS-III/IV gasoline (petrol) and diesel fuels. "As regards BS-IV implementation in the entire country, projects worth Rs 20,000 crore have already been approved for implementation. The total investment for upgrading to BS-IV/BS-V will be around Rs 80,000 crore," the report said.

Currently, BS-IV petrol and diesel are being supplied in whole of Northern India covering J&K, Punjab, Haryana, Himachal Pradesh, Uttarakhand, Delhi and parts of Rajasthan and wester UP. The rest of the country has BS-III grade fuel. From April 1, 2016, all of Goa, Kerala, Karnataka, Telangana, Odisha, Union Territories of Daman and Diu, Dadra-Nagar-Haveli and Andaman & Nicobar will get BS-IV fuel. The rest of the country will get supplies of BS-IV from April 1, 2017. The Committee recommended that the ministry chalk out an action plan for the implementation of the fuel quality norms.

"The Committee would also expect the Ministry to review the implementation of the policy with the organisations under its charge at regular intervals," the report said. It wanted a study to be conducted to asess the benefits arising out of implementation of fuel quality norms vis-a-vis the expenditure that would be incurred to implement the norms. "As the required infrastructure for production of BS-IV and BS-V/VI fuels are being developed in oil refineries, the Committee recommend the Ministry to strictly adhere to the implementation schedule of BS-IV quality of fuel for the entire country by April 2017 and further BS-VI by 2020 so that 'One Country - One Fuel Norm' will become a reality," the report added.

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