The Hindu Business Line : Ministry yet to consider RIL's request on export of surplus LPG

Reliance Industries Ltd's (RIL) attempts to seek permission from the Petroleum Ministry to export surplus liquefied petroleum gas (LPG) from the west coast have met with little success till now. "The Ministry has not considered the request till now," official sources told Business Line. The Petroleum Ministry has sought views from all concerned including the state-owned oil marketing companies (OMCs) on the issue.

Before considering the proposal, the domestic requirement has to be kept in mind, sources said. As per estimates in July alone, sales of LPG rose 5.2 per cent to 868,900 tonnes in the domestic market. If this trend is maintained, then the domestic demand for LPG is expected to be higher for the full year with imports touching close to 3 million tonnes, sources added. Currently, export of LPG is not permitted and RIL has to sell the LPG produced at its Jamnagar refinery in Gujarat to public sector OMCs. Besides, RIL has also made a commitment to OMCs for meeting their demands.

RIL had approached the Petroleum Ministry to permit it to export surplus LPG and allow it to import on the deficit east coast in order to save on freight cost. The Ministry has also taken the views of the state-owned OMCs on allowing RIL to export surplus LPG. IndianOil on behalf of the OMCs arranges most of the LPG import requirements under the term contract for meeting the deficit between the domestic demand and indigenous LPG availability. The term contract is normally finalised during July-August for the succeeding calendar year.

OMCs' opinion

According to the OMCs, no surplus availability is envisaged till December 2006 on account of expected growth rate and shortfall in production at other sources to meet the country's demand. As such RIL should not be permitted to export LPG as requested by them, they have said.

However, the Ministry also feels that export option is better economically for RIL in view of the prevailing high prices in the international market, while domestically the prices are controlled and RIL is not compensated for domestic sales as the PSUs are for their under-recoveries.

"If the trend continues, RIL would be approaching us regularly for permitting them to export LPG. As such, a solution needs to be found on this issue," Ministry officials said. The Ministry has since asked RIL and OMCs to work out an optimisation plan and detailed modalities at the earliest.

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