With BS6 norms kicking in from April 2020, the government has said that the fuel upgraded fuel required will be available by March in certain cities. We've already told you that automakers are gearing up to meet this deadline and the changes that have to made to the cars to be able to achieve the BS6 emission standards, will see car prices rise. However, a report in the Hindustan Times suggests that petrol and diesel prices will also go up from April 2020 as fuel retailers are looking to pass on the higher cost of producing BS6 compliant fuel. The report says that two senior officials at the fuel companies, requesting anonymity, stated that this hike inthe state-run fuel retailers recoup their investments in upgrading their refineries to produce the cleaner fuel. This however, will be subject to government approval.
Refineries have spent more than ₹ 30,000 crore to improve its facilities to make sure that BS6 fuel is ready before the updated emission norms kick in on April 2020. One of the two officials told HT, "We have made large investments in upgrading to BS-VI and we need to get a return on our investments. This is only logical. The thought process is to recover cost and not profit-making."
The officials expect a price increase of anywhere between a few paise to a maximum of ₹ 2, which is likely to be charged in the form of a special cess or duty. However, discussions continue to be held with government officials. In fact within hours of the announcement of the Union Budget, there was a hike made in cess on fuel prices, petrol prices shot up by Rs 2.50 per litre while diesel prices went up by Rs 2.30 per litre.
Another hike then would certainly dampen buyer sentiment. Automakers have seen sales slide over the past couple of years and are looking forward to positive sentiments from the market and even the government, by means of incentives and lowered GST. For the time being though, there seems to be no relief