BS VI fuel cess

Why is it in the news?
  • The Indian OMCs (oil marketing companies) have made a representation to the government to recover about ₹35,000 crore invested in upgrading their refineries to produce BS VI fuel.
  • India is gearing up to switch over to the world’s cleanest fuel from April 1, 2020.
More in the news
  • The OMCs plan to recover this money by imposing a cess Rs. 0.70 to Rs. 1 on every litre of petrol and diesel.
  • BPCL alone has invested about Rs. 7,000 crore in upgrading its refineries to produce BS VI-compliant fuels.
  • Background:
(1) India adopted Euro-III equivalent (or Bharat Stage-III) fuel with a sulphur content of 350 ppm in 2010.
(2) India then took seven years to move to BS IV that had a sulphur content of 50 ppm.
(3) Transition from BS IV to BS VI took just three years.
(4) In, BS VI, petrol and diesel contain just 10 parts per million (ppm) of sulphur.
  • Arguments of an OMC director:
(1) All our refineries are already producing BS VI fuels and it’s being sold at many retail outlets now.
(2) Today, there is no extra pricing as there is no recognition in the market.
(3) We have made industry representation to the government to recover the money.
(4) Any life cycle of a project is minimum 15 years and a reasonable payback period is 8 years.
Source
The Hindu
Posted by Jawwad Kazi on 26th Feb 2020
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