Fortune India|July 2016

An almost arbitrary decision to leapfrog fuel standards has managed to disrupt two large industries—oil and auto manufacturing. It’s good news for the environment, but for companies it means a huge drain on resources. And it all starts with INDIANOIL .

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SANJIV SINGH Director (refineries), IOC

What does it take to get a behemoth to sprint? Answer: a goad. Indian Oil Corporation (IOC), the country’s largest company, and No. 1 on the Fortune India 500, is used to moving at a sedate pace. Like most public sector undertakings, IOC is happy to set up committees to deliberate and ponder upon issues. But when the government cracks the whip, even a giant like IOC must react.

What the government has done is to advance the implementation of Bharat Stage VI emission norms to 2020 instead of 2024, bypassing BS V entirely. (BS V was to come into force from 2019.)

Before we get any further, a quick look at the Bharat Stage norms may be useful. Introduced 16 years ago, these rules are meant to regulate (and control) air pollutants from vehicle engines and generators. The emission standards are set up by the Central Pollution Control Board, and are based on European regulations. The government had laid out a road map for the phased implementation of BS norms—till it decided to skip a step. Meanwhile, there are parts of the country still not on BS IV. Oil companies provide both BS III and BS IV fuel to different regions. The deadline for BS IV pan-India is April 2017.

Why did the government take this drastic step? According to a report by the Environment Pollution (Prevention and Control) Authority (EPCA), “Quick implementation of Euro 5 and Euro 6 emission standards is needed because diesel emissions close gap with petrol emissions only at the Euro 6 stage to address the toxic risk.”

To explain the science: BS IV and BS VI have far lower sulphur content than BS III. In diesel, the sulphur content is progressively reduced from 350 ppm (parts per million) in BS III to 50 ppm in BS IV and 10 ppm in BS VI. In petrol, the sulphur spec gets reduced from 150 ppm to 50 ppm to 10 ppm.

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