Price hike on BS-VI won't hurt consumers, will meet April deadline: IOC

State-run Indian Oil Corporation (IOC) on Friday said the company would meet the April deadline for introducing BS-VI emission norms.

Company executives, including Chairman Sanjiv Singh, said they expected the matter of price hike for the cleaner fuel to be settled before the roll-out.

The three public-sector oil companies — IndianOil, Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL) — have spent Rs 35,000 crore on refinery upgrade for BS-VI. IndianOil has spent around Rs 17,000 crore.

“If the industry has spent so much, we presume there should be some consideration for this … let me assure you the price increase will not pinch (the retail consumers),” said Singh.

At present, all of IndianOil refineries are supplying BS-VI fuels and its terminals and depots have switched to the cleaner version of the fuel. In terms of retail outlets, Singh said states such as Maharashtra and Rajasthan had moved to BS-VI.

The country’s largest fuel retailer had last year introduced higher-grade fuels in the National Capital Region, one the world’s most polluted regions.

Singh pointed out diesel and petrol prices would be benchmarked to Euro VI instead of the current Euro IV, with effect from April 1.

“The international prices for Euro IV and Euro VI are marginally different, but it does not take care of the capital expenditure,” Singh added.

The differential, he added, is currently a couple of cents and will allow for variable delta in pricing.

BPCL is looking for a price increase of 70 paise to Rs 1.30 a litre hike on account of the upgrade while IndianOil is seeking 50 paise-Rs 1 a litre.

Upgrade to BS VI is part of India’s attempt to curb vehicular pollution. 

Part of this effort, starting April this year, is allowing vehicles compliant with only BS-VI to be sold and registered in the country. Oil companies are expected to make BS-VI fuel available to ensure a smooth transition to these new norms.

Commenting on the company’s petrochemicals business, Singh said he expected petrochemicals to contribute around 30 per cent to profit in the next five years. 

In FY19, petrochemicals contributed roughly 16 per cent to profit before tax (PBT).

Singh said the company was exploring battery manufacturing based on India’s liquefied petroleum gas (LPG) model, where the cylinders are owned by the companies.

IndianOil and Phinergy of Israel signed a joint venture in February to produce metal air batteries. 

It is also in discussion with leading auto companies for field trials for this.