It is for both emissions control and fuel efficiency. When it malfunctions or you disconnect it, the computer uses default values for the mixture, which are usually richer. Slight to moderately richer mixtures won't damage an engine, but lean mixtures will (overheating, detonation). Would it cause the loss you describe (about 20%?)? I don't think so, but if you haven't ever changed it or don't know when it was done, it's probably due anyhow. Is it for emission control or fuel efficiency? What happens when it is disconnected--does the engine run alright? If it was malfunctioning, could it account for a loss of fuel efficiency of 5-7mpg as in my 84 528e?