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Indian Refiners Seek Artificial Mechanism to Recover Transition Cost to BS VI fuel

Public and private oil refiners of India seek government’s intervention to compensate for production and dispensing finances involved in the shift from BS IV fuel to BS VI fuel. This shift is an attempt by the Indian government to lower the pollution index of the country, that is anticipated to be commenced by mid of March 2020. However, BPCL, one of largest petroleum refineries will be commencing the supply of BS VI fuel from March 1, 2020 across the country. It was reported that the director of BPCL aims to compensate for the investment by stating the price of fuel with an extra cost between INR 0.70 to INR 1 per litre. Furthermore, as the prices of the product are marked based on the import parity, an artificial mechanism is required to make up for the difference between the import parity and the aspired compensated prices so that the domestic producers can recover their investment cost.