Cleaner fuel comes at a cost! BS VI to spike petrol, diesel prices by up to Rs 2 per litre

Come April 2020, you will have to pay more for petrol and diesel. This hike in cost will be implemented as fuel retailers look to pass on the higher cost of producing Bharat Stage VI-compliant fuel by early next year. Higher fuel costs will help state-run fuel retailers compensate for the investments they pumped in to upgrade their refineries so as to produce the cleaner fuel.

According to a report in Livemint, the refiners have estimated a cost of Rs 30,000 crore to upgrade their facilities to implement India's BS VI emission norms. The final decision will be implemented only after the government gives its approval.

An official said that the price increase is likely to be anywhere between a few paise to Rs 2, which might be levied in the form of special cess or duty, as mentioned in the daily. The Auto Fuel Vision and Policy 2025 in June 2014 had recommended 75 paise cess to make up for the additional investments.  

The report mentions that, however, the pricing will be decided closer to the launch, which is on April 1, 2020.

While there will be cleaner fuel with the launch of BS VI, consumers will feel the pinch of the additional costs, especially since the prices for petrol and diesel was hiked by Rs 2 each in the Union Budget 2019. An additional special excise duty of Re 1 per litre along with another Re 1 for road and infrastructure cess formed the increased pricing.

The country is shifting to BS VI emission norms as the government aims to keep rampant pollution in check. BS VI is expected to reduce greenhouse gas emissions significantly.

The standards, keeping in tandem with European regulations were first implemented in 2000. Bharat Stage II was implemented in 2005, followed by BS III in 2010. While some parts of the country had moved on to BS IV in 2010, it was implemented nationwide in 2017. However, in 2016, the government had announced that it would skip BS V norms and leapfrog to BS VI by 2020.

With the BS VI compliance, prices of vehicles are also likely to rise. According to reports, the automotive industry, along with its representing body Society of Indian Automobile Manufacturers (SIAM) urged the state-run oil companies including Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp to provide the BS VI grade fuel at least 30 to 45 days ahead of its launch.

Also read: You may soon be able to buy petrol, diesel from supermarket

Also read: Budget 2019: Govt increases excise duty, cess on petrol, diesel by Rs 2