The government, which had earlier turned down a plea from the UK-based BP to enter the aviation turbine fuel (ATF) retailing in India on the grounds that its investments in the country did not suffice to meet the eligibility criterion, is now re-evaluating the matter.
Sources told FE that Sashi Mukundan, country head of BP India, recently met petroleum minister Dharmendra Pradhan and apprised him afresh of BP’s investments here. The meeting, which lasted for nearly an hour, was also attended by senior officers in the ministry.
“BP has re-submitted the investment details, which is currently being examined. There is a detailed process to review the application, which would take some time,” an official privy to the development told FE.
BP Exploration (Alpha), a wholly owned subsidiary of BP, had on June 11, 2014, submitted an application for authorisation to market ATF or jet fuel, claiming to have invested $477 million (including $259 million of capex investment) and a proposed investment of $2.3 billion.
But Pradhan had informed the Lok Sabha on April 20: “To get marketing rights for transportation fuels, namely petrol, diesel and ATF, applicant must meet the requirements as per clause 3 of marketing resolution of March 8, 2002. The requirements, inter alia, include investment or proposed investment of R2,000 crore in exploration or production, refining, pipeline or terminals leading to additionality to the existing assets and/or creation of new assets in the eligible activities… However, the Directorate General of Hydrocarbons (DGH) has reported that BP share of expenditure was $508 million between FY12 and FY14. Of this, capital expenditure (capex) component is $171 million and operational expenditure (opex) is $337 million. This did not meet the joint requirements of the Clause 3(I) and 3(IV) of the Marketing Resolution dated March 8, 2002, and thus the application dated June 11, 2014, was rejected.”
Currently, the ATF retailing market in India is dominated by three PSU oil marketing companies, IOC, BPCL and HPCL. Private players such as Reliance Industries and Essar Oil are minor players.
BP India spokesperson told FE earlier, “BP has been engaging with the ministry of petroleum and natural gas regarding its application to market ATF in India. We are confident we meet the requirements and will continue to engage with the government to review the decision.”