RIL again eyes local mkt to sell refinery products

Written by Anupama Airy | New Delhi, Nov 17 | Updated: Nov 19 2008, 04:51am hrs
Taking advantage of the steep fall in international crude oil prices, Reliance Industries Limited (RIL) is once again keen to sell products in the domestic markets from its existing 33 mtpa export oriented refinery as also its soon to be commissioned 29 mtpa refinery at Jamnagar SEZ.

Seeking special regulatory dispensations, Reliance has informed the government that it may re-open its retail outlets for selling petrol and diesel in the domestic markets.

Reliance has also made a strong pitch for selling diesel to public and private oil marketing companies on the grounds that there is a net deficit of the product in domestic markets even after accounting for production from the private sector refinery of Essar as also the Mangalore refinery of ONGC.

Reliance in its letter to the petroleum ministry said, The product from the SEZ/EOU refineries of Reliance is expected to plug this gap and avoid simultaneous import and export. It is therefore necessary that the product from Reliance refineries be made available to all entities with marketing rights. Otherwise, for want of domestic product, private oil companies may have to import product for their domestic needs. It further said in its letter, It will be incongruous if Reliance imports diesel for its retail, while supplying to PSUs because of the barrier of net foreign exchange (NFE) and double duty. The first of the two regulatory perquisites sought by Reliance, in order to release petroleum products from its EOU and SEZ refinery into the domestic markets, is that the value of domestic supplies of petrol and diesel be counted as foreign exchange earnings, even though the realization is in Indian rupees. And the second dispensation relates to making the excise duties for domestic sales at par with the duty paid by other refineries such as Essar and MRPL.

However, the public sector oil refiners are not comfortable with this and feel such a permission to Reliance by the government may result in a sudden flooding of products in the market. The public sector oil refining cum marketing companies have recently started making positive margins on the sales of petrol and diesel and sudden release of RILs products in the domestic market may eventually result into stock piling and forced exports of the products.

When contacted a senior petroleum ministry official confirmed the move and said the government is yet to take a stand on RILs proposal.