Playing the blame game with MRPL's losses

Vol 7, PW 7 (18 Jun 03) Midstream & Downstream

WHEN IN trouble, blame Reliance.

All too often this is the recourse of rival refiners struggling to compete in a market where the success of India's only private sector oil giant is undeniable. Mangalore Refineries is no exception.

Today, it blames Reliance for losses incurred since the abolition of controlled pricing. These losses, it claims, stem from a government cap that restricts the sale of MRPL productsin India to 4.5m t/y.

We are incurring losses because government rules are biased towards Reliance," reveals a source. Reliance - as you would expect - refuses to comment, but even so, it would be justified in pointing out that MRPL has been a loss-making refinery since the 3.69m t/y Phase-I of this 9.69m t/y refiner first begun pumping out products in March 1996.

Yet MRPL is adamant and accuses the Industry Logistics Planning group that replaced the Oil Coordination Committee of supporting Reliance. Under ILP rules, IOC, BPCL and HPCL are restricted to buying just 750,000 t/y petrol, 530,000 t/y kerosene, 2.5m t/y diesel, 250,000 t/y jet fuel and 180,000 t/y LPG from MRPL.

At any given time we have a surplus of 1m-2m tonnes of products, he adds. "For the past two years we are forced to export around 2m tonnes a year." MRPL argues that government rules stipulate PSUs must cater to 60% of the countrys product demand, followed by JV companies like MRPL and then Reliance.

But according to MRPL, Reliance supplies 30% while MRPLs share is only 10%. The ILP should recognise MRPL as an ONGC refinery and increase our supplies to the domestic market," he adds.

"PSUs should buy from us first and then from Reliance. A better solution might be to abolish quotas all together and let Reliance, MRPL and others survive or perish in the fight for market share!