Relianceآ’s argument of unfair discrimination

Vol 5, PW 11 (18 Jul 01) Midstream & Downstream
     

Reliance's principal contention is of unfair treatment compared to other state-owned refineries and that it is being used "as a balancing (swing) refinery," i.

e. that state-owned oil companies only lift products when it benefits them financially but refuse to when market conditions are adverse.

Reliance argues, for example, that Indian Oil and Bharat Petroleum are always happy to offtake LPG and kerosene because they enjoy "negative tariff production" but are reluctant to offtake diesel and petrol because these attract "compensating tariff production." Reliance argues that this forces it "to export these products at heavy penalties" and that "on every occasion the penalty for Reliance increases since RPL is forced to export when prices are adverse." Reliance also argues that IOC and Bharat Petroleum only offtake products during times of distress, i.e.

when one of their refineries is temporarily shut down or not producing. According to Reliance this action is in breach of an oil ministry communication dated 26th February 1999 that says: "During the transition period (before dismantling APM) export of surplus if any, of controlled products (diesel and petrol) of all refineries will continue to be handled by IOC as a canalising agency." Reliance asks: "Is the domestic market reserved only for PSU refineries Is this the intention of MoPNG expressed on February 26th 1999 Has RPL been treated at par"