The current total estimate of investment of Rs 13,500 crore by oil refineries to upgrade their technology is considered very high and challenging.

AK Bhatnagar and NR Raje of R&D centre of Indian Oil Corporation Ltd have admitted that since the pollution from automobiles depends upon the engine technology as well as fuel quality, the whole issue has to be addressed through common programme to find cost effective solutions in terms of improved automobile technologies and enhanced fuel properties. There are specific fuel properties which have direct impact on emissions. These have been identified through US Auto Oil Programme as well asEuropean Programme on Emissions, Fuel and Engine Technologies (EPEFE).

Both Bhatnagar and Raje stated that the existing oil refineries needed about Rs 13,500 crore investment to upgrade their technology for producing fuel for meeting the Euro II norms. The Centre for High Technology (CHT) for implementing various projects in PSU refineries for upgradation of fuel quality has estimated that for producing quality gasoline the total required investment is Rs 3500 crore and that for producing quality diesel the total required investment would be Rs 10,000 crore. These figures may go up substantially if Indian fuel quality has to be brought in line with Euro III and Euro IV norms. This may also increase the cost of fuel to be produced and sold in a deregulated scenario.

The oil companies should, therefore, consider implementing this plan in a phased manner and market two grades of fuels for different categories of vehicles ie., complying to less stringent and complying to more stringent norms. The issue,however, needs deliberations and the cost benefit analysis needs to be jointly carried out by automobile industry, oil companies and environmentalists. The idea should be to derive maximum benefit for improvement of environment quality if huge investments are to be made in refineries, they stated.

They stated that the refineries will have to do a thorough study of various options available to them for meeting the fuel specifications in the years 2000-2005 and it is a challenging task ahead. The major additional equipment to be installed in existing refineries to meet the target specifications will be diesel hydro-desulferisation reactors for producing low sulphur diesel, aromatic extraction units, isomerisation units and DHDS revamping at some of the refineries such as Mathura and Panipat units.

Both the experts stated that while Euro I norms implementation did not warrant any major fuel specification changes, the implementation of Euro II norms were preceded by a directive no 93/12/EEC of March 23, 1993relating to sulphur content. The Euro II norms are effective in Europe since 1998. As per Euro II norms the sulphur content in diesel was reduced from the level of 0.2 per cent w/w to 0.05 per cent w/w by October, 1996. The European Auto Oil Programme which was an R&D programme conducted jointly by the European Automobile Manufacturers (ACEA) and European Petroleum Companies (EUROPIA) brought to the focus certain fuel parametres which had direct impact on emissions.

For gasoline the parametres are aromatic, olefins, sulphur, benzene and oxygen content. For diesel the parametres are cetane number, sulphur, distillation T-95 and polyaromatics. The European Community later issued a directive no 98/70/EC in October 1, 1998 regarding the fuel specification corresponding to Euro III for year 2000 and Euro IV norms for year 2005.

According to this directive, the maximum sulphur content in gasoline should be reduced to 0.015 per cent by year 2000 and to 0.005 per cent by the year 2005 whilst the benzene contentshould be maintained at one per cent in both the periods. The maximum aromatic content in gasoline should be reduced to 42 per cent by the year 2000 and to 35 per cent by the year 2005. The maximum olefins content in gasoline should be reduced from 18 per cent in 2000 to 7 per cent in 2005, whilst the maximum lead content should be maintained at 0.005 gm per litre in both the periods.

For diesel, according to the directive, the minimum octane number should be 51 by 2000 and 53 by 2005 and maximum sulphur content should be reduced from 0.035 per cent in 2000 to 0.005 per cent in 2005. Both Bhatnagar and Raje also pointed out to the Worldwide Fuel Charter (WFC) prepared jointly by American, European and Japanese engine manufacturers and stated that the specifications of WFC under category 2 and 3 are more stringent than the Euro norms. WFC has three categories. Category 1 corresponds to no emission control, category 2 somewhat corresponds to Euro I and II levels while category 3 somewhat corresponds to EuroIII and IV levels. They said that WFC is only a proposal and has not yet been adopted as a specification anywhere in the world. Both American Petroleum Institute and NPRA have disowned the WFC saying that they were not taken into confidence while publishing it. However, this WFC can be taken as a guideline for what is likely to come in future.

The experts further stated that in the last meeting of Bureau of Indian Standards held on May 14, 1999, the earlier target specification for the year 2000 have been accepted. However, the Union ministries of surface transport and industry have been putting pressures for further fuel quality changes particularly with respect to meeting Euro II norms. The only changes which is likely to be strongly recommended and likely to be pursued would be with regard to reduction of sulphur to 0.05 per cent in diesel fuel. In future the fuel specifications for both gasoline and diesel has to be revised as per Euro II norms.