Gail, RIL Seek Naik Help To Recover Rs 1,000cr Dues From Oil PSUs

New Delhi, May 22: | Updated: May 23 2003, 05:30am hrs
Gail India and Reliance Industries have sought governments intervention in recovering over Rs 1,000 crore of their dues from national oil marketing companies. The dues are on account of unrealised amount on LPG and kerosene sales to these companies, including Indian Oil, IBP, Hindustan Petroleum and Bharat Petroleum.

Reliance chairman Mukesh Ambani met petroleum minister Ram Naik on Wednesday in this regard and sought his help in recovering Rs 613 crore from the oil PSUs for unrealised LPG price since November last and kerosene since January.

Gail has also sought the ministrys help in recovering Rs 340 crore on LPG sales to the state-run oil marketing companies.

In a letter to petroleum secretary BK Chaturvedi, Gail CMD Proshanto Banerjee has pointed out that any linkage of a revision in LPG price with non-payment of subsidy on LPG by the Centre to the oil PSUs cannot be accepted as Gail is not a beneficiary of the existing subsidy scheme and is also being denied direct marketing rights.

At present, Gail is producing 1.31 mtpa LPG and has seven LPG fractionator units. In addition to this, Gail is also transporting 1.75 mmtpa LPG produced by RIL through its Jamnagar-Loni pipeline.

While the oil PSUs are required to pay import parity price for LPG they receive from Gail and RIL, they are paying only the October 2002 prices for LPG and December 2002 prices for kerosene.

Non-revision of LPG price coupled with non-inclusion of freight element in fixing the LPG price and non-reimbursement of central sales tax (CST) has resulted in a combined financial implication of Rs 340 crore, says Gail in a letter to the petroleum ministry.

However, senior IOC officials said the oil retailers have frozen the refinery transfer price of RIL, MRPL, ONGC and Gail along with their own refining divisions, to check losses. We have not been allowed to revise prices of LPG and kerosene in spite of firming up of crude prices. The subsidy provided by the government (of Rs 68 on LPG and Rs 2.5 on kerosene over and above the retail selling price) is insufficient to cover the cost, they said.

Prices of all liquid fuels, including superior kerosene, produced at inland refineries are fixed on the basis of the import parity prices at the nearest port plus a notional freight between the nearest port and the inland refinery. Based on this principle, the ex-refinery LPG price for four inland refineries such as Mathura, Panipat, Barauni and Koyali, is fixed which includes a freight element.

In contrast, price of LPG from Gails LPG recovery plants is being fixed by simply transporting the landed price at the nearest port to its fractionator location. This is a clear case of discrimination and the dues arising on account of freight from the nearest port to our fractionator location for 2002-03 works out to be Rs 105 crore, says Gails letter.

On the CST issue, Gail has pointed out that before dismantling of the APM regime, this tax was being paid by oil PSUs and the under-recoveries were being reimbursed from the oil pool account.

To enable oil PSUs to get reimbursement of CST in the post-APM era, the government had issued a gazette notification on January, 16, 2003, announcing a special scheme.