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Indian Oil Corporation (IOC), the biggest of the three public sector oil refiners in India, has started to award contracts to upgrade its flagship 13.7-million tonnes per annum (mtpa) refinery in Vadodara to comply with BS IV fuel standards.
It is also having preliminary discussions to upgrade its Mathura (8 mtpa) and Barauni (6 mtpa) refineries.
Bharat Stage (BS) standards are environmental norms that regulate vehicular emissions, controlling the levels of sulphur, carbon monoxide, nitrogen oxides and particulate matter that can be released when petrol or diesel is burnt.
Currently, BS IV-compliant fuel is supplied in 15 major cities while the rest of the country still uses BS III-compliant fuel.
Advanced deadlineLast October, Minister for Petroleum and Natural Gas Dharmendra Pradhan said India would implement BS VI fuel requirements by April 2020, advancing the deadline by four years and skipping the BS V stage altogether.
This has left both automobile manufacturers and crude oil refiners grappling with a four-year deadline to comply with stricter emission standards. For now, IOC has started the process of first producing more BS IV fuel at its Gujarat refinery.
As part of this, it recently awarded a ₹38.04-crore contract to TEMA India, a Mumbai-based process equipment manufacturer specialising in shell and tube heat exchangers. TEMA’s proprietary technology in building the heat exchanger gives it a cost advantage over competitors, said the company’s Managing Director HK Sippy.
The heat exchanger component removes the sulphur content in oil to the extent required to comply with fuel quality standards.
Less than 5 per cent of the total capital allocation for BS VI will be spent on getting the right heat exchangers, CS Doshi, Director, TEMA India, told BusinessLine.
Meeting the 2020 deadline would require a complete overhaul of systems at public sector refineries, he added.
TEMA currently has an order book of ₹300 crore, with clean fuel accounting for a little under 30 per cent of this.
Quantum leapIOC, Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corporation Ltd expect to invest ₹30,000-35,000 crore over the next four years to make the quantum leap to producing auto fuels that will comply with BS VI emission norms by 2020.
The largest refiner, IOC, already has a ₹21,000-crore capital expenditure plan in place to upgrade its total refining capacity of 80 mtpa to BS VI, BusinessLine had reported in January.
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