Vol 3, PW 3 (03 Mar 99) Midstream & Downstream

Unwanted petrol is just one of the problems faced by Reliance in its dealings with the government.

Another is its controversial marketing deal with Indian Oil Corporation (IOC), formally approved by the IOC board at a meeting on 28 October last year. In itself, IOCs agreement with Reliance appears pretty innocuous, a straightforward, if exclusive, marketing agreement between the countrys largest petroleum product distributor and the promoter of the countrys largest refinery.

When it was signed, however, it provoked howls of disbelief and allegations of corruption were liberally thrown around. Political parties raised questions in parliament and previously anonymous oil bureaucrats came out into the open to condemn it.

One of them, Nirmal Singh, Joint Secretary, Refineries, was subsequently removed from his post. Since then, the deal has been blocked, and Reliances Chairman, Dhirubhai Ambani, is privately fuming at the lack of progress.

One source tells Petrowatch that Ambani believes the deal should have been signed long ago and is perplexed that his once legendary influence in the corridors of power is unable to carry it through. In December last year, reacting to public outrage, the oil minister Vazhappady Ramamurthy, surprisingly withdrew his support to the Reliance-IOC deal and announced that other refiners, namely Bharat Petroleum and Hindustan Petroleum should be included.

Many suspect the change of heart was prompted by an instruction from Ambani. Bharat Petroleum and Hindustan Petroleum, however, both refuse to sign up.

Until they change their mind, the deal will remain blocked.