Setback for MRPL over raising refining capacity

Vol 7, PW 8 (02 Jul 03) Midstream & Downstream

MANGALORE REFINERIES has suffered a major setback in its ambition to run at full installed refining capacity of 9.69m t/y.

In June, the domestic retail oil industry's coordinating agency, the Industry Logistics Planning group, wrote to the oil ministry turning down MRPL's plea to be allowed to pump more products into the domestic market. There is no place for MRPL's extra production of petroleum products in the oil industry's monthly supply arrangements, ILP leader Indian Oil is understood to have written in reply to an April letter from MRPL seeking removal of the 6m t/y cap set in April 2002 on its refining capacity.

Intriguingly, even though a cap of 6m t/y is set on MRPL's refining capacity, the ILP permits only 4.5m t/y to enter the domestic system. MRPL exports the rest.

Equally intriguing is that MRPL chose to remain quiet for a full seven months over this flagrant violation of the ILP group agreement. We learn that it was only in November last year that MRPL first wrote to the oil ministry demanding permission to produce at its full installed capacity of9.69m t/y.

The oil ministry, it emerges, forwarded the letter to Indian Oil. An Indian Oil official dispels any notion of discrimination against MRPL.

We have nothing against MRPL," he said. "But there is no provision in the agreement which says that any company can increase its production (arbitrarily).

Inclusion of extra MRPL capacity would mean flouting ILP rules. MRPL will have to wait till the expiry of this agreement.

The current ILP agreement between IOC, HPCL, BPCL, IBP, Reliance and MRPL ends in March 2004. "It is only a matter of another eight months," he adds.

"Maybe we will include MRPL in another agreement which does not have any quantum restrictions." But MRPL - reeling under heavy financial losses inherited from its former Hindustan Petroleum and Aditya Birla management - is impatient. We have received a copy of IOCs letter to the oil ministry," reveals a source.

"Why should we wait till March 2004" MRPL is angry at the treatment it is receiving from industry peers that it is willing to share a few secrets. "Its surprising that IOC talks about flouting ILP rules!" he adds.

"Check ILPs records for 2002-03. Youll find IOC and even BPCL has pumped more amount of products than allowed.

Their refineries were processing more crude than the stipulated capacity.

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