Indian Oil to pump in ₹21,000 cr to meet BS VI standards

Tanya Thomas Mumbai | Updated on January 27, 2018 Published on January 20, 2016


The three public sector oil refiners will have to invest ₹30,000-35,000 crore over the next four years to produce auto fuels that will comply with BS VI emission norms.

The largest refiner, Indian Oil Corporation, already has a ₹21,000-crore capital expenditure plan in place to upgrade its total refining capacity of 80 million tonnes per annum (mtpa), a senior company official told BusinessLine.

Its smaller PSU counterparts Bharat Petroleum (31 mtpa) and Hindustan Petroleum (15.5 mtpa) will require over ₹5,000 crore each to build additional treatment facilities that will produce cleaner fuel complying with the stricter emission norms. The funding will come equally from internal accruals and debt, they said, and will require about 30 months to build and commission. All three refiners said they would comfortably meet the 2020 deadline for BS VI emission norms.

Independent market analysts also echoed this view. Sumit Pokharna, Deputy Vice-President, Kotak Securities, said: “PSU refiners have cleaned up their balance sheets in the past few years, benefiting from the dramatic fall in crude oil prices and the removal of fuel subsidies.” Minister for Petroleum and Natural Gas Dharmendra Pradhan had recently said that the country would implement Bharat Stage VI fuel requirements by April 2020, advancing the deadline by four years and skipping the BS V stage altogether. Currently, BS IV-compliant fuel is being supplied in 15 major cities while the rest of the country is still using BS III-compliant fuel.

The Bharat Stage standards are environmental norms that regulate vehicular emissions, controlling the levels of carbon monoxide, nitrogen oxides and particulate matter that can be released when petrol or diesel is burnt

For public sector refiners, the incremental capital expenditure will go towards upgrading the refineries. All three already have plans in place to boost refining capacity designed to produce fuel that will meet the stricter norms. For instance, Bharat Petroleum plans to expand capacity to 50 mtpa by 2020 while HPCL is targeting 15 mtpa by that date.

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Published on January 20, 2016
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