Numaligarh diesel too expensive for Myanmar

Vol 20, PW 25 (07 Sep 17) People & Policy

Behind the smiles of Narendra Modi's visit to Myanmar, BPCL-owned Numaligarh refinery has quietly dropped its Indian-led distribution agency in favour of a home-grown Myanmar company.

Neither NRL nor Singapore-based Iceberg Holdings will admit it, but their May 16 agreement appears all but dead. When NRL's first 30-tonne consignment of Indian diesel, flagged off on September 4 to coincide with Modi's arrival, reaches the Myanmar border town of Tamu, it will not be met by Iceberg but by Burmese-owned Parami Energy, with whom NRL last month (August) signed a contract for the sale and distribution of 90 tonnes of diesel.

On the surface, NRL's separation from Iceberg is over pricing. But Iceberg believes politics played a role too.

"With Modi's visit it makes sense," says a source. "Despite this NRL's diesel is still 26% more expensive than diesel reaching Myanmar from Singapore.

How can it (NRL) sustain this arrangement if diesel coming from just 400-km away (by road from Numaligarh) is more expensive than diesel traveling two days by sea from Singapore?" In its 'indicative offer price' Iceberg proposed 548 Kyat/litre ($0.41) to NRL at the Indian border and an offer price of 650 Kyat/litre ($0.48) "which NRL needs to match" at end-destination Kalaywa. "Myanmar diesel trade is open and market driven," adds our source.

"No buyer (in Myanmar) is interested in taking two (NRL) trucks for a sample run at a loss."