The oil marketing companies (OMCs) have represented to the petroleum ministry that in case Indian Oil Corporation (IOC) decides to do a coastal loading of LPG on its account and cost on an illustrative basis, the loss to OMCs as compared to the present scenario for the month of September 2008, will be to the extent of Rs 947.35/mt.
The OMC?s extra annual outgo on this account for estimated 360 TMT of coastal volumes for the period April-December, 2009 will be about Rs 34 crore, based on the September 2008 implication, assuming the movement is only for Mangalore. It is likely that coastal movement may be made to Visakh and Haldia also in which case losses to OMCs will be proportionately higher and the implication will change from month to month and from movement to movement basis. Sources told FE that Reliance Industries has been demanding Jamnagar refinery transfer price (RTP) for all coastal movements out of Jamnagar without any adjustment for notional coastal freight, if at all RIL has to undertake coastal movement. RIL?s present loss then becomes OMCs additional cost.
As per the present system, Industry Pricing Group is working out RTP on Import Parity Price (IPP) principle for every month for coastal Refineries, including RIL Jamnagar among others. Since, IOC needs to move product coastally ex RIL, Jamnagar, Notional Coastal Freight (NCF) is also worked out every month for various ports based on roundtrip voyage time, bunker and freight of Time Chartered vessel. As per the enclosed working, the price payable to RIL for ex-Jamnagar delivery is Rs 37,537.11/mt for September 2008. The RTP of Mangalore for September ?08 is Rs 38,166.84/mt.
?If vessel is arranged by OMCs, then a NCF of about Rs 1157.81 per mt is to be deducted from Mangalore RTP. In addition, some of the elements of RTP such as Wharfage, Ocean loss & Insurance are taken care by OMCs directly as these are either paid at unloading port or are part of vessel movement. Hence, amount reckoned against these elements in RTP is also to be deducted from Mangalore RTP. Hence, net amount payable to RIL for coastal movement to Mangalore works out to Rs. 36589.76/mt. Hence, net under recoveries to RIL works out to Rs. 947.35/mt.
RIL is now demanding Jamnagar RTP for all coastal movements out of Jamnagar without any adjustment for notional coastal freight, if at all RIL has to undertake coastal movement. RIL?s present loss then becomes OMCs additional cost.
