The country could miss its April 2010 deadline to meet the Bharat Stage-IV emission norms for 11 major cities, say public sector refineries.
According to the National Auto Fuel Policy, Bharat Stage-IV, the Indian version of Euro-IV, is to be applicable in the country by April 2010.
However, the plant upgradation plans of the oil refiners, who have to sell petrol and diesel with the stringent emission standard from April 1, are facing a delay as suppliers of the equipment are heavily booked.
Delivery of the engineering equipment is taking eight to twelve months extra than the committed time frame.
"The equipment suppliers are heavily booked. If a refiner has not placed an order well in time, he is bound to get delayed," said an official from Punj Lloyd that does engineering procurement and construction work for refineries.
The state-run refiners have committed over Rs 30,000 crore (Rs 300 billion) to upgrade their refineries to meet Euro IV norms.
Mangalore Refinery and Petrochemicals, a subsidiary of the Oil and Natural Gas Corporation, will spend Rs 8,000 crore (Rs 80 billion) to produce high grade diesel and petrol, conforming to higher emission standards like Euro IV and for expanding its capacity from the existing 9.69 million tonne per annum (mtpa) to 15 mtpa.
Hindustan Petroleum Corporation is investing Rs 4,000 crore (Rs 40 billion) on its refineries in Mumbai and Vishakapatnam. The company's Vishakapatnam refinery has recently been given Rs 2,000 crore (Rs 20 billion) to meet the Euro IV norms for petrol.
"We are struggling for equipments. As a lot of projects have become viable, the manufacturers are loaded full with orders to be met. If the average waiting period was 12 months earlier, it has gone up to 24-36 months now," said the executive director of a Mumbai-based refinery.
The Indian Oil Corporation, however, says it will be able to complete all upgradation work at its seven refineries before the deadline.
"We have put the necessary infrastructure in place to meet the Euro IV specifications and we are confident that we will be able to complete work at these refineries well before the 2010 deadline," said IOC's director-refineries, B N Bankapur.
IOC is pumping in Rs 3,000 crore (Rs 30 billion) for upgradation of its Haldia refinery and Rs 6,000 crore (Rs 60 billion) for the Gujarat refinery. It is installing equipment at its Panipat and Barauni refineries with an investment of Rs 3,400 crore (Rs 34 billion), while at its Guwahati and Digboi refineries minor investments of Rs 200 crore (Rs 2 billion) each is being made.
At the Mathura refinery, the company is investing Rs 700 crore (Rs 7 billion).
Most of these refiners are currently feeding the domestic market. Analysts, however, say that the upgrade to Euro IV standard would position them well to tap the high margin international markets as and when they want to.
Globally, over 50 per cent of refinery capacity additions have been announced in six countries--China, India, Indonesia, Saudi Arabia, Iran and Turkey.
According to experts, Asia's share of global refining capacity is predicted to increase from 27 per cent in 2006 to 34 per cent in 2015. India could contribute significantly to capacity additions -- to add 87 mmtpa between 2006-2012.
However, no significant refinery capacity expansions are planned in Europe and the US. Smaller refineries in North America and Europe are finding it uneconomical to invest in cleaner fuels because of high compliance cost and cleaner fuel norms.