BS-VI not to be the end of road for branded fuel sold by OMCs

In fact, they see sales rising further, will aggressively market these fuels laden with imported additives that improve driving experience and reduce emissions

Even though the National Capital Region (NCR) is gearing up for the formal launch of the much-awaited Bharat-VI grade of fuel, your favourite branded fuel variants such as XtraPremium, Speed, Power and Turbojet will not be going off the market. 

According to industry sources, the companies are further expecting an increase in the sales on branded fuel post the launch of BS-VI. “We are going to aggressively market branded fuel. Basically, such fuel includes imported additives that help in improved performance and efficiency, better driving experience, reduced emissions and lower maintenance cost. So with BS-VI in the market and additives in that will help deliver a better performance to the people using it,” said a senior Indian Oil Corporation official, in terms of anonymity. 

Interestingly, companies have decided not to pass on the impact of the launch of BS-VI fuel of around Rs 1 billion to consumers. On an average, Delhi consumes around 1,267,000 metric tonnes of diesel and 902,000 metric tonnes of petrol per financial year. “If you take the national average, branded fuel sales are not even 5 per cent of IOC’s total sales and, put together, only around 1-2 per cent of the sales of all the three oil marketing companies. This is despite the fact that the price difference between branded and non-branded fuel has come down to around Rs 2 per litre,” said a Mumbai-based analyst.  

While Indian Oil markets XtraPremium, Hindustan Petroleum and Bharat Petroleum sell Speed and Power brands, respectively. BS VI fuel, which limits the amount of sulphur to 10 parts per million (ppm) from 50 ppm in BS-IV, will be launched in the Delhi market on April 1. Already, companies have started rolling out higher graded petrol and diesel with around 30-40 ppm sulphur content fuel gearing up for the final launch. Sources confirm that such fuel is already available in all 387 outlets in Delhi.  

“Already sales of premium brands are much lower outside metros. Once the complete launch of BS-VI is done in April 2020, it is unlikely to have many takers across India,” he said. As part of the launch in Delhi, majority of the tanks in IOC’s nearby terminals, such as Tikrikalan and Bijwasan, are already filled with BS-VI fuel and in the next 10-15 days the higher grade fuel may be completely on stream. IOC refineries in Mathura and Panipat will be catering to the Delhi market. While Mathura will be enough to meet the requirements in Delhi, Panipat may act as a standby source.  

In January, petrol consumption recorded a growth of 15.6 per cent over last year, while diesel consumption during the month recorded a growth of 14.5 per cent to reach 6.6 million tonnes from 5.8 MMT in January 2017. Interestingly, since March 2017, petrol consumption has consistently recorded more than 2 MT every month.