Petrol, Diesel Prices Could Go Up In BS6 Era

The hike in price would be a fixed Rs 0.80 per litre on petrol and Rs 1.50 per litre on diesel

• The premium on fuel price is to recover refinery upgradation costs.

• Public sector oil companies spent around Rs 80,000 crore to upgrade refineries.

• Oil companies say not charging a premium will lead them into losses.

• The government is considering alternatives instead of charging a premium on fuel.

According to a report on ETAuto.com, the government is considering adding a premium on petrol and diesel prices once we enter the BS6 era in April 2020. The premium is to recover costs incurred by oil companies to upgrade their refineries so that they can produce BS6-compliant fuel.

If this step is indeed taken, petrol prices could go up by Rs 0.80 a litre and diesel prices could go up by Rs 1.50 a litre. However, these costs will be fixed for a period of five years.

To give you a more clear picture, public sector oil companies have had to invest around Rs 80,000 crore to ensure that their refineries produce BS6-compliant fuel. Similar costs were incurred by private sector oil companies as well.

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The companies have presented their case to the petroleum ministry. They have stated that if they are not allowed to recover these costs, they might start seeing red in their ledgers. The government, on the other hand, might allow oil companies to keep the prices of fuel high, even when the global rate is low. This could be a measure to control public backlash on the subject.

While it has not yet been confirmed by any of the above-mentioned parties, it is a logical idea that BS6 fuel will be more expensive. 

Source