Oil cos switch to BS-VI fuel without raising prices; rate hike due to high state VAT: IOC

India has switched over to the world's cleanest petrol and diesel without raising prices, Indian Oil Corp (IOC), the nation's largest oil firm, said on Thursday.

Leapfrogging from BS-IV grade fuel straight to BS-VI grade, equivalent to Euro-VI fuel, petrol and diesel would have resulted in an up to Re 1 per litre increase in cost but oil companies decided against passing this on to consumers and instead adjusted it against the reduction warranted from international oil prices plummeting to a 17-year low.

IOC also said the prices of petrol and diesel have not been increased despite cost going up significantly.

Increase in fuel prices in some states like Maharashtra, Karnataka and West Bengal by about Re 1 per litre each from April 1 has been on account of hike in state sales tax or VAT rates, it said.

PTI had on Wednesday reported that oil companies will not raise prices while supplying BS-VI grade fuel.

In a statement, IOC said public sector oil firms had incurred about Rs 35,000 crore in upgrading their countrywide refineries, pipelines and marketing distribution network to be able to supply petrol and diesel with 10 parts per million (ppm) of sulphur as against 60 ppm in BS-IV fuels earlier.

"Taking into consideration the CAPEX costs and the likely incremental OPEX costs, there would be some impact on the retail selling price of petrol and diesel," it said.

"Considering the current crisis brought on by the COVID-19 pandemic, the oil marketing companies (OMCs) have kept the prices of petrol and diesel unchanged with effect from 1st April 2020, which were otherwise also being maintained steady."