Mumbai: In a major change of strategy, India’s largest private sector company seems to be putting its domestic auto fuels retailing plan on the backburner and is instead opting for exports.
Reliance Industries Ltd (RIL) has sought an EOU (export-oriented unit) status for its existing 33 million tonnes per annum (mtpa) refinery at Jamnagar in Gujarat, which means that it will have to export a minimum of 75% of its production in return for being allowed to import crude oil at zero duty.
An RIL spokesperson confirmed the company’s application for an EOU status for its existing refinery. “The company will go little slow on its petroleum retail business as there is no level playing field,” said an RIL official who did not want to be named. Currently, import of crude oil for petroleum products sold in the domestic market attracts a customs duty of 10%. And the government sets the price at which the public sector retailers of fuel can sell, which, in turn, forces private firms such as RIL to charge more or less the same price.
RIL finds export prices for auto fuels more profitable than selling its petrol and diesel through its petrol pumps in India. The new 27mtpa Reliance Petroleum Refinery coming up at Jamnagar too is housed in a special economic zone, indicating that RIL is keen to export its output rather than supply the domestic market.
The firm will be able to import crude oil without getting specific advance licences for exports if it gets an EOU status.
The focus on exports is a shift from RIL’s earlier strategy, which visualized an ambitious countrywide retail network that would sell petrol and diesel.
Similarly, Essar Oil, another refiner that had plans for a network of petrol stations, has decided to go slow on its expansion drive.