Emission norms: Panel suggests levy of fuel cess

India might soon see a special fuel upgradation cess on petrol and diesel sold in the country to mop up Rs 64,000 crore (Rs 640 billion) to finance refinery upgradation, provided the government goes ahead with the suggestions of a committee headed by former Planning Commission member Saumitra Chaudhuri. The upgradation is required to move on to the next level of fuel emission norms.

The panel suggested 75 paise a litre as cess on both petrol and diesel for seven years between 2014-15 and 2021-22. This comes at a time when the fourth Bharat Stage (BS) emissions norms, introduced in 2010, were moving at a snail’s pace due to the inability of Indian refiners to upgrade the fuel quality. Currently, fuel and new models of vehicles sold in 14 cities have to confirm to BS-IV norms. These cities would move to the next level, BS-V, from April 1, 2015.

The panel suggested the cess for BS-IV and BS-V fuels should accrue to the Oil Industry Development Board (OIDB). “The accumulated OIDB cess can be deployed to finance the modernisation and upgradation of refineries so as to enable them to produce BS-IV and BS-V grade fuels in a manner that is consistent with the charter and regulations of the OIDB,” added the expert committee on ‘Auto Fuel Vision and Policy-2025’.

The committee’s

report would go into the framing of auto fuel policy.

According to the suggestions, BS-IV emission norms for two-wheelers and three-wheelers will be applicable for vehicles manufactured from April 1, 2016, while for BS-V, it would be from April 1, 2020 for new models and for continuing models within one year thereafter.

On the other hand, BS-V emission norms for two- and three-wheelers would be applicable nationwide from April 2017 and for four-wheelers from April 1, 2020 and for continuing models within one year of that - before April 1, 2021.

The panel added no change is expected in the fuel quality between BS-V and BS-VI fuels. “Thus, it is only emission norms that will have to be made more stringent.” BS-VI norms are supposed to be applicable by April 1, 2024.