State-run oil marketing companies (OMCs) have launched cleaner BS-VI grade petrol and diesel across the country from Wednesday with an investment of Rs 35,000 crore without raising their pump prices, thanks to the slump in international oil rates.
As per the commitment, the three public sector companies – Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) have fully transitioned to BS-VI compliant petrol and diesel across the country, an IOC spokesperson said.
Executives of the three oil companies said on condition of anonymity that consumer prices of petrol and diesel have not been raised to recover the investments in upgrading refineries as prices of auto fuels had been freezed since March 16 despite a steep fall in their international rates.
Petrol is currently sold at Rs 69.59 per litre in Delhi and diesel is priced at Rs 62.29 a litre since March 16 despite India’s average crude oil purchase price (Indian basket) has dropped by over 27%.
“In the normal course oil companies would have raised petrol and diesel prices to recover their Rs 35,000 crore investments in refinery upgradation. But now they will recover the money by keeping a portion of the gains from lower international oil prices,” an executive working for OMCs said requesting anonymity.
An IOC statement said, “The PSU [public sector undertaking] OMCs have incurred capital expenditure to the tune of about Rs. 35,000 crore in upgrading their countrywide refineries, pipelines & marketing distribution network to be able to usher in BS-VI fuels, directly leapfrogging from BS-IV fuels.”
“Further, the refineries shall incur incremental operating costs on a sustained basis to manufacture BS-VI petrol and diesel with 10 parts per million (ppm) of Sulphur as against 50 ppm in BS-IV fuels earlier. Taking into consideration the CAPEX costs and the likely incremental OPEX costs, there would be some impact on the retail selling price of petrol and diesel,” it said.
Considering the current crisis brought on by the Covid-19 pandemic, the OMCs have kept the prices of petrol and diesel unchanged with effect from April 1, 2020, which were otherwise also being maintained steady, it added.
IOC clarified that increase in retail selling prices of petrol and diesel in some states such as Maharashtra, Karnataka and West Bengal from Wednesday is “purely on account of the increase in VAT [value-added tax] rates” by the respective state governments. “The OMCs have made no change in the basic selling price and have maintained it at the same level,” it said.
In view of the extremely volatile situation, the OMCs are keeping a close watch on global cues and the market scenario while taking pricing decisions, it added.
