Prior to this, products were being moved from IOC's refinery in Mathura to Punjab, Haryana and further northwards to Delhi. Freight and other overheads like sales tax would be factored into the final cost of the product which will not be the case with the inclusion of Panipat as the new pricing point. It is now likely that there will be a marginal reduction in the price of MS and HSD sold in Delhi because of this.

As is well known, every refinery in the country has a pricing point in its location be it Mumbai, Mangalore, Chennai or Vizakhapatnam. The exceptions are the three-million-tonne Numaligarh refinery being commissioned shortly in Assam and also the 0.5-million-tonne facility of Madras Refineries in the Cauvery Basin. This isbecause MS is not produced in either of these refineries.

The pricing issue for petro-products is possibly the most complex in Gujarat which has a high incidence of sales tax - in the region of 20 per cent. This has been the sore point for industries like the Indian Petrochemicals Corporation and IOC's Koyali refinery. Products made in Gujarat sometimes end up being cheaper when sold in other states and this has been the biggest problem for the oil sector where such adjustments need to be done by the pool account.

For decontrolled products like furnace oil, naphtha, low sulphur heavy stock (LSHS) and light diesel oil (LDO), the refineries have worked out a system where there are different prices for port and inland refineries given additional costs like freight and sales tax. For the last four months, prices of free products in Panipat, Barauni, Mathura and Koyali (where IOC has its inland refineries) are higher than those in port locations.

Experts have welcomed the inclusion of Panipat as a pricingpoint since it will be a less expensive zone which, in turn, will directly benefit consumers in Haryana, Punjab and even Delhi. This, in any case, was inevitable as that was the whole objective of commissioning the refinery. IOC is now planning to increase its capacity from six million tonnes to nine million tonnes.

The refinery, in the opinion of experts, could be considered a "jinxed" project as it has been fraught with problems since it was first conceived way back in 1984. The Karnal refinery, as it was referred to then, never really got off the ground till some years back. Now, even after its commissioning, there have been a couple of fire breakouts leading observers to believe that its safety aspects need careful looking into.