New Delhi: Mukesh Ambani-run Reliance Industries Ltd (RIL) has sought government approval to turn its existing 33-million-tonne Jamnagar refinery in Gujarat into an export house, a status that would entitle the company duty-free import of crude oil.
RIL has applied to the Commerce Ministry for grant of export-oriented unit (EOU) status for the refinery that has been in operation since July 1999, a highly-placed government official said.
The company’s subsidiary Reliance Petroleum Ltd is already building an export-oriented 29 million-tonne refinery adjacent to the existing unit. The new refinery is scheduled to be completed in 2009.
The company plans to convert the refinery, which, during its initial years of operation got sops like income tax holiday and sales tax deferment, into an export house as it found selling petroleum products like petrol and diesel in the domestic market uneconomical due to the subsidy public sector firms receive from the government.
Indian Oil, Hindustan Petroleum and Bharat Petroleum have been able to keep fuel prices way below the cost as they got oil bonds and discounts from crude oil producers like ONGC to make up for the loss. Reliance and other private retailers like Essar Oil and Shell, do not get such concessions.
Industry sources said EOU status would mean that RIL does not pay 5% import duty on crude oil, resulting in lower cost of production of petrochemical feedstock naphtha, which is likely to find its way into Nova Chemicals of North America — RIL’s potential takeover target.