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Govt plans to impose extra 30% environment compensation on diesel vehicles

The government plans to impose an additional 30 per cent environment compensation charge on diesel vehicles and is considering tightening the emission norms by mandating fuels compliant with Euro-IV norms by next year and Euro-V norms by 2016 while it is targeting Euro-VI norms by 2021.

Supply of higher quality petrol and diesel will require big-ticket investments in upgradation of refineries that can be recovered by imposing a cess on auto fuels or by raising their retail prices, officials said. “A meeting of the expert committee is expected next week in this regard,” an official said.

The government had constituted the committee, headed by Planning Commission member Saumitra Chaudhuri, in December 2012 for preparing an ‘Auto Fuel Vision and Policy-2025’.

The committee will recommend an auto fuel quality road map for the next 10 years and will also suggest corresponding upgradation of vehicle engine technology, officials said.

Refiners will require investments of Rs 70,000 crore to produce enough Euro-IV and Euro-V grade of fuel to meet the country’s requirement, executives of India’s biggest refiner by volumes, Indian Oil Corporation, said.

Most domestic refineries are producing Euro-III fuel while some refiners produce Euro-IV fuel to meet the demand of major cities and metros where sale of the higher grade fuel is mandatory. Refiners have already invested over Rs 32,000 crore in upgrading their facilities for producing Euro-III and Euro-IV fuel.

Meanwhile, most auto companies are preparing the road map to upgrade technology and products in line to meet the new emission norms and adapt to new fuel. The apex industry body, Society of Indian Automobile Manufacturers, says it is committed to the new policy.

“We want to have a single norm for fuel across the country. We have no issue with the new policy as long as they do not keep a dual fuel norm that will not just affect the environment but also complicate distribution for the auto companies to supply two different types of vehicles in the domestic market,” said SIAM director-general Vishnu Mathur.

In line with the auto fuel policy, harmful lead was phased out from February 1, 2000 and the government simultaneously introduced Euro-IV grade auto fuels in certain metros and major towns by the end of 2010.

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