Date:15/07/2005 URL: http://www.thehindubusinessline.com/2005/07/15/stories/2005071501980200.htm

Back Fuel purchase price: Reliance-PSU oil cos' deadlock to end soon

Richa Mishra

New Delhi , July 14

THE deadlock between Reliance Industries Ltd and the State-owned oil marketing companies (OMCs) on the fuel purchase price to be paid by the latter to the private sector oil company may end soon.

Industry sources said that while RIL has categorically refused to be a party to subsidy burden sharing, it has, however, assured that it is ready to consider offering the products on better commercial terms.

Tough negotiations are going on between OMCs and RIL for supplying kerosene and liquefied petroleum gas at a price that could ease the OMCs subsidy burden.

The OMCs and RIL are likely to reach a decision in a week's time. The Petroleum Ministry has asked the stakeholders to reach a consensus on the issue and work out a mechanism.

RIL has not agreed to OMCs' request to provide higher quantities of kerosene than last year's supplies at a price that could ease their subsidy burden. For 2005-06, the State-owned companies have asked Reliance to provide kerosene at levels higher than last year.

However, RIL has been turning down the request till it is assured of adequate payment.

During 2004-05, Reliance had supplied a total of 1.1 million tonnes of kerosene to OMCs though only 4,00,000 tonnes had been initially contracted.

The extra supplies were necessitated due to production disruption at the Koyali refinery of Indian Oil Corporation and the Mangalore refinery.

Incidentally, the issue of payment has arisen with the Government having artificially frozen import parity price at levels on March 31, which is not acceptable to Reliance.

Reliance has supplied 1,20,000 tonnes of kerosene during the April-June quarter of this year as in the corresponding period last year.

Incidentally, the Petroleum Ministry has been hinting at asking the private oil companies and standalone refineries to bear a portion of the burden on subsidised retail fuel prices.

The under-realisation on petrol and diesel during the first quarter (April-June) this year is Rs 4,700 crore, and on LPG and kerosene, it is Rs 4,800 crore.