28 Nov 2017 13:24 IST

Indian Oil not to pass on entire BS-VI fuel cost to consumers

There will be a marginal increase in price

Indian Oil Corporation may not pass on the entire cost burden of Bharat Stage VI grade fuel to the consumers, though there will be a marginal increase in price.

“The way pricing is done today has nothing to do with cost,” Indian Oil Corporation Chairman Sanjiv Singh told BusinessLine. “We are working backwards based on the prices of products in the global market based on trade parity and then fixing the price. In the international market, the difference between Euro-IV and Euro-VI is not significant. Although we are investing around ₹17,000 crore on BS-VI projects, we are not going to load all that cost on upgraded fuel products.”

Singh said “there would be a change (in pricing). In my opinion, it would be marginal and the total cost of these products will not be passed on to the customer.” Singh is clear that IndianOil products will still be priced based on the international product. With the government stepping on the pedal to roll out BS-VI grade fuel at the earliest, oil refiners and car makers are also getting their act together.

Premium fuels

But will this mean that BS-VI grade fuel will be priced closer to branded or premium fuel being sold by the oil retailers? Singh said, “The premium products will still continue. We are adding a lot of additives to the products such as gasoline for improved performance in the engine. These are self-cleaning type of fuels that reduce your carbon depositions. In BS-VI, we are predominately reducing sulphur.” Along with BS-VI, retailing of premium fuels will still continue, he said.

Sales of premium or branded fuel had started picking up after Finance Minister Arun Jaitley in 2014 reduced the excise duty on these products. The Central Excise duty on branded petrol was cut from ₹7.50 per litre to ₹2.35 in Union Budget 2014. During April to September 2017, the sale of branded or premium grade petrol stood at 0.37 million tonne. Today also, the price difference between non-branded and branded fuel is about ₹2 a litre. Regular petrol in Delhi costs ₹69.28 a litre.