Reliance complains about PSU refinery expansion

Vol 5, PW 9 (20 Jun 01) Midstream & Downstream

One company that would be happy if the Panipat expansion, or for that matter any refinery expansion, falls through is Reliance Petroleum.

Contractors regularly point to Reliance when things go wrong with a PSU expansion project, but rarely produce evidence to back their (often staggering and unsubstantiated) claims. Even so, Reliance's opposition to PSU refinery expansionin India is no secret.

In a letter dated 27th March this year the company's Delhi-based Group President V.Balasubramaniam cites it as one of the principal reasons why the company is having such trouble selling its diesel and petrol in the domestic market.

"Even after RPL's refinery went on stream in July 1999, adding 27m t/y capacity, which fact was known to the government," reads the note. "The PSU refineries were permitted to expand their exisiting capacities by 22m t/y." The letter criticises expansion plans at Numaligarh (3m t/y), Koyali (3m t/y), Barauni (1m t/y), Vizag (3m t/y), Panipat (6m t/y), and Mangalore (6m t/y) and adds: "This additional capacity of PSUs, which was created subsequently, has been given priority over Reliance in domestic absorption (of diesel and petrol)." No shallow claim.

Reliance provides convincing evidence in the form of a letter from the oil ministry dated 26th February 1999 to indicate that the government has indeed backtracked on its pledge to treat the company on a par with its public sector rivals.