RIL may get export perks for diesel sales

Aiming to meet the shortfall of diesel, which has witnessed exponential demand growth, the government is considering a proposal to declare Reliance Industries' sales of the fuel domestically as deemed exports.

State-owned oil marketing companies, which will import about 3.5 million tonnes of diesel this financial year —about 20 per cent more than last year — to meet higher demand growth, say it would be cheaper to buy from Reliance Industries’ refinery if it is given the deemed export status as compared with importing diesel. If granted, these public sector companies will not have to pay transportation charges and taxes such as customs duty.

“The gap between domestic diesel production and demand can be made good by the private sector refineries,” said Sarthak Behuria, chairman and managing director of Indian Oil Corporation (IOC), the largest oil marketing and crude oil refining company in the country. Demand for diesel grew by 18 per cent between April-July as against government-owned refineries, which can meet about 12 per cent growth in demand, Behuria said.

ON DEMAND

The government is considering a proposal to declare RIL's sales of diesel domestically as deemed exports

The government move comes against the backdrop of exponential diesel demand growth

State-owned oil marketing companies were planning to import about 3.5 million tonne of diesel this financial year

It was about 20 per cent more than last year

The firms say the gap between domestic diesel production and demand can be made good by the private sector refineries

Oil marketing companies, including Bharat Petroleum Corporation and Hindustan Petroleum Corporation, will soon send a formal proposal to the government on removing taxes on domestic diesel sales from RIL’s refinery.

Early last year, RIL’s 33 million-tonne-per-annum refinery at Jamnagar, Gujarat, was granted export-oriented status, which allows the refinery to export products at zero duty. The refinery, which produces about 12 million tonne of diesel every year, will have to pay customs as well as excise duty on the fuel if it sells it in the domestic markets. The two taxes will raise the price of the fuel by more than Rs 9 a litre.

Coupled with the absence of transportation costs and insurance, the price at which the marketing companies buy from the Reliance refinery could be at least 30 per cent cheaper than the imported fuel.

The Reliance refinery already sells cooking gas in the domestic market after the product was given deemed export status last year.