Shift to BS VI likely to push up costs of oil refiners, car makers

Complying with the BS VI norms is likely to increase the costs of oil refiners as well as auto companies and controlling theses costs will be a challenge for them.

To meet the Centre’s April 1, 2020, deadline for BS VI emission norms, automobile manufacturers would need to do double the work in four years’ time. The task is not easy for oil refiners as well, but they do have the luxury of making a technological jump from BS IV to VI, skipping BS V.

“There is no skip as far as the technological work is concerned. As far as a passenger car is concerned, we are first going to reduce the particulate matter in BS V and then reduce NOX (nitrogen oxide emissions) in BS VI. All component manufacturers are working with automobile makers right now to achieve this. Regulators may want to skip, but as far as the auto sector is concerned the work load gets doubled in four years,” said Kenichi Ayukawa, Managing Director and Chief Executive Officer of Maruti Suzuki India Ltd.

He admitted that the work to shift to BS VI emission norms will increase costs, but whether it will lead to a price increase and by how much, is “still premature to comment”. “All car makers will face the same issues. Even if there is a price increase, all players will face the same issue,” he added.

The BS VI deadline was notified by the Centre last week and for achieving these emission norms, automobiles will need fuel of certain specifications which is also called BS VI.

Sanjiv Singh, Director (Refineries), Indian Oil Corporation Ltd, while explaining the nuances had said, “Please understand, even today, all the refineries can make BS VI without adding anything. But, this would mean some would have to compromise on the type of crude while some will have to sacrifice the capacity. When we are saying we want to increase our capability it means that we want to make some additions so that those compromises are not required to be made,” he said.

Singh added that even cars that are BS VI compliant will get the certifications under test conditions.

“Emission standards are achieved in standard testing conditions. They are not what is being delivered on road. The engine is capable of operating under such low emissions when the fuel is available,” he said.

On the BS VI emissions, both the auto industry and oil refiners have rarely seen eye to eye, but both agree that simply jumping to BS VI will not solve air pollution problems.

“It is not a magic wand. Only the new cars that will be registered will meet BS VI emission norms. New cars are only a small segment of the total vehicles on the road. Despite having cars running on BS VI you will still have so many BS III cars on the road. The impact of such emission norms will only be seen when older cars go off the road,” a senior official at an oil marketing company said.

Inputs from Richa Mishra