The Modi government could consider the cess option to compensate state-owned oil firms for the cost incurred in upgrading refineries for the shift from BS-IV fuel to BS-VI from April 1.

State-owned oil firms have made a representation to the oil ministry on the ways to recover about Rs 30,000 crore invested to upgrade to the clean fuel from the next financial year.

Industry sources said the firms feel that a way out should be found for recovering the investment made by the refineries to shift to BS-VI emission norms, the equivalent of Euro VI, from April 1.

One of the options suggested was the cess which would help the firms to recover the capital incurred. Sources said that the Auto Fuel Vision and Policy 2025 announced in June 2014 had recommended a 75 paise cess to recoup additional investments to produce cleaner fuel.

“We have been engaged with the government for an assurance that we will be allowed to recover the investment over time. The feedback we are getting is that the oil ministry would soon take up the matter with the finance ministry,” sources said. Oil ministry officials said a call would be taken at an appropriate time.

Sources said the exact quantum is being worked out, but the sum could be anywhere between Rs 0.50 and Re 1 a litre.

With global crude prices moving south, sources said the impact on the prices of petrol and diesel in the short to medium term would be insignificant.

Brent crude price has fallen around 15 per cent since the beginning of the year and the spread of coronavirus and its impact on the global economy would further lower the demand for fuel.