New Delhi: Mumbai Aviation Fuel Farm Facility Pvt. Ltd (MAFFPL), the jet-fuelling facility formed by Mumbai International Airport Ltd (MIAL) and three state-run oil retailers, is facing resistance from three private sector oil companies.

MIAL, Indian Oil Corp. Ltd (IOC), Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corp. Ltd (BPCL) hold 25% each in MAFFPL, which was formed in March.

Reliance Industries Ltd, Essar Oil Ltd and Shell India say MAFFPL has an advantage because it has laid pipelines to supply fuel to planes at the Mumbai airport, according to a senior official at the Competition Commission of India (CCI).

“They say that if in future they are to supply ATF (aviation turbine fuel), they will have to do so via tankers, making them non-competitive," said the official, who didn’t want to be named.

MAFFPL is being scrutinized by the antitrust watchdog. Typically, every joint venture (JV) in which 26% or more of the voting rights, or 50% or more of the members on the board, are controlled by the partners, has to pass CCI scrutiny.

“In response to the feedback sought from Essar Oil by the CCI, the company had suggested ‘open access’ to the ATF handling infrastructure in Mumbai International Airport on a fair pricing basis, so that the customers (airlines) get the benefit of competition and this also ensures a level playing field for all players," an Essar Oil spokesperson said in response to a query emailed on Wednesday.

MIAL, IOC, HPCL and RIL hadn’t responded by press time on Tuesday to queries emailed on 13 August.

“Whatever aspects CCI has raised about MAFFL will be responded by the companies through their legal consultant within the stipulated time," a BPCL spokesperson said.

The CCI official, who did not wish to be identified, said that RIL and Shell had raised “similar objections". The CCI official said that although the oil regulator, the Petroleum and Natural Gas Regulatory Board (PNGRB), mandates a common carriageway for all oil companies, in practice, that is not the case.

“Frankly, the companies, instead of approaching it (the PNGRB), want to somehow get their common carriageway in this case via the CCI. It is now for the CCI to determine whether the JV can function without a common carriageway," the official said.

In addition, the official said the CCI itself had objected to the fact that even after the first five years, the partners within the JV itself would continue to hold a minimum of 51% equity.

“In other words, equity dilution beyond 49% would not be possible," said the official. “By first keeping the JV locked in for five years, and then by retaining a majority equity control for good, the partners seem to want to foreclose the market, and so it will be a consideration from a competition standpoint," the official added.

A second CCI official said while MIAL and the three oil PSUs (public sector undertakings) have been asked to give in their responses by 19 August, the CCI will take a call, on whether to clear the JV or investigate the case further, on 25 August.

Separately, the second official said, on 25 August, the CCI will take a call on a deal under which Sun Pharmaceutical Ltd is acquiring Ranbaxy Laboratories Ltd for $3.2 billion in stock and will assume $800 million of the latter’s debt.

Tarun Shukla in New Delhi and Promit Mukherjee in Mumbai contributed to this story.

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