deepu 0 Report post Posted May 20, 2005 Reliance ends rebate to PSUs ---------------------------------- Jyoti Mukul in New Delhi | May 20, 2005 10:23 IST In another blow to public sector oil companies, Reliance Industries Ltd has stopped the discount it offered on diesel and petrol sold to these firms. The country's only private sector refiner was offering a 40 per cent discount on the difference between import and export parity prices to oil marketing companies like Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum. The discount worked out to around Rs 700 a kilolitre. Effective April 1, the discount has been withdrawn. IndianOil executives told Business Standard that the PSU will buy 500,000 tonnes of diesel and 11,000 tonnes of petrol from Reliance during the first quarter of the current financial year for which it would be paying Rs 1,537 a kilolitre more than the export price. IndianOil had entered into a five-year marketing arrangement with Reliance last year to source petrol and diesel for its retail outlets. Reliance executives were unavailable for comments. The oil marketing companies pay to refineries the import parity price, which is also termed as the refinery gate price. The import parity price is higher than the export parity price since international petroleum product prices are on the rise. Since the retail prices have not been revised since November, companies are selling at a lower price. The oil marketing companies last year bought four million tonnes of fuel from the 33-million-tonne Reliance refinery in Jamnagar, Gujarat. In the case of integrated oil companies, the loss on selling at a lower price from retail outlets is made up by the high refinery gate price. "It is cheaper for us to buy from the Reliance retail outlets instead of buying from the refinery gate," said the Indian Oil executives. "With new emission norms coming into force and work on upgrading the Mathura, Haldia and Panipat refineries getting delayed, the oil marketing companies are facing a shortage of Euro II diesel. We need supply from Reliance this year more than last year," the Indian Oil executives added. Reliance had earlier expressed its inability to supply upgraded fuels is now supplying in small quantities to these companies. According to the marketing arrangement, the oil marketing companies are required to inform Reliance of their requirements 45 days in advance. The oil marketing companies had frozen the refinery gate price for petrol and diesel on March 15 following non-revision of retail prices but the freeze was lifted recently. Triple whammy * The price of the Indian basket of crude oil has risen to $46 a barrel from $36.09 in April last year * The retail prices of petrol and diesel were last revised in November 2004 * Reliance stops 40% discount on the sale of petrol and diesel to oil PSUs Courtesy - rediff.com Share this post Link to post Share on other sites
