* Govt panel recommends nationwide Euro IV fuels from April
* Euro V in phases from April 2019-April 2020
* Suggests levy on fuels to help fund refinery upgrade
By Nidhi Verma
NEW DELHI, May 14 Indian oil refiners will need
to invest 800 billion rupees ($13.4 billion) in upgrades to
produce cleaner fuels, a government official said, as the
world's fourth biggest oil consumer seeks to curb dire air
pollution in its cities.
The World Health Organization, in a recent study, said air
pollution in New Delhi was the worst anywhere, while 13 of the
dirtiest 20 cities were in India.
Economic growth and urbanisation in the country of 1.2
billion will lengthen traffic jams on already-choked city roads,
increasing the need for action to minimise health risks such as
cancer, strokes and heart disease.
"We are doing all this for public health now that there is
sufficient evidence on the ground to suggest that ambient air
pollution has deleterious effects on human health," said
Saumitra Chaudhuri, head of a government panel tasked with
proposing new fuel standards.
Chaudhuri, who is also a member of India's Planning
Commission, said he hoped that India's next government would
consider the panel's recommendations.
Results of a general election are due on Friday and exit
polls give the opposition Bharatiya Janata Party (BJP) and its
prime ministerial candidate Narendra Modi a good chance of
securing a parliamentary majority together with its allies.
"We are more concerned with the environment and we want
people to have better quality of life which also includes better
quality of air," said Narendra Taneja, a BJP energy policy
coordinator, saying his party would seek a "holistic solution".
The proposed changes would take effect in two stages, with
the introduction of fuels that are equivalent to the Euro IV
standard from April 2017, followed by a further step up to the
Euro V standard in April 2020.
India lags China in switching to higher-quality fuels, with
Beijing aiming for nationwide use of Euro V fuels from 2018.
China began full scale use of Euro IV compliant gasoline from
this year and will shift to Euro IV diesel from next year.
Europe, meanwhile, already requires Euro V and VI standards.
These set increasingly tight limits on harmful gaseous
pollutants and particulate matter, with separate requirements
applying to different types of diesel and petrol engine.
About three dozen Indian cities currently use Euro IV
equivalent fuels, also known as BS IV fuels, while motorists in
the rest of the country use BS-III fuel.
BS-V require gasoline to have a sulphur content of 10 parts
per million (ppm) down from 50 in BS IV and 350 ppm and 150 ppm
sulphur in BS III diesel and gasoline.
There were about 160 million vehicles on India's roads on
March 31, 2012, according to a government website.
According to a report for the government, India consumes
about 69 million tonnes a year of diesel - of which 70 percent
is accounted for by the transport sector - and about 17 million
tonnes of gasoline.
LEVY TO FUND UPGRADE
Chaudhuri said the $13.4 billion figure covered all of
India's refineries excluding Reliance Industries,
owner of the world's biggest refining complex.
With this hefty and timely investment Indian refiners should
be able to produce Euro V-type fuels from December 2019,
enabling a smooth switch from the following April and avoiding
Indian refiners had to import Euro IV fuels in 2010 when
India introduced them in some parts of the country.
Chaudhuri said in the first phase BS-V fuels will be
introduced in northern India in April 2019. Officials at Indian
refiners said that most of the investment costs would be linked
to producing BS-V fuels.
Officials at state refiners said they need to install new
secondary units like desulphurisers, hydrotreaters and change
the catalyst of the existing units to enable existing refiners
to produce Euro V compliant fuel.
Indian Oil Corp, the country's biggest refiner,
will invest about 80 billion rupees, while Hindustan Petroleum
Corp will invest 50-60 billion rupees, sources at the
two companies said.
To aid state refiners, which rely on subsidies to sell fuels
at regulated prices, the committee has recommended that a cess,
or levy, of 0.75 rupees a litre be imposed to help raise 650-700
billion rupees over seven years, Chaudhuri said.
He said the committee has also recommended a similar cess on
BS III compliant fuel in the intervening period to bridge that
price gap that may spur use of the inferior fuel.
($1 = 59.7800 Indian Rupees)
(Reporting by Nidhi Verma; Editing by Douglas Busvine and David