The Hindu Business Line : Petro products: Govt undecided on Myanmar, Bangla Re payment terms

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New Delhi Jan. 28 The Union Government is yet to take a view on Myanmar's proposal for rupee payment terms for petroleum product imports from India.

This has led Bharat Petroleum Corporation Ltd (BPCL) to put on hold its move to seek export trading house status for its subsidiary, Numaligarh Refinery Ltd (NRL), located in the North East.

The company had also proposed a similar deal with Bangladesh.

According to sources, while Myanmar had said that it would import in rupees, Bangladesh is yet to get back to NRL on its offer of exports of petroleum products.

BPCL's proposal to these countries to supply petroleum products and more specifically, diesel, has to be seen in the context of its geographical proximity to these countries, virtually their backyard.

Bangladesh has for quite some time now, taking up with India, the issue of adverse balance of trade between the two countries with the former importing far more than what it exports to India.

Rupee payment terms would provide the perfect pressure point for India to source more goods from that country.

BPCL had thought of seeking export trading house status for NRL when the Government was drawing up plans for exporting petroleum products to Bangladesh and Myanmar from NRL and through Indian Oil Corporation's subsidiary Bongaigaon Refinery and Petrochemicals in Assam.

If the proposal had materialised, NRL would have become eligible for fiscal benefits available to exporters in this category.

Company sources explained that in March last year NRL had offered to supply 1.2 lakh tonnes of diesel to Bangladesh, at a competitive rate.

A formal proposal has been submitted on diesel exports to Bangladesh Petroleum Corporation in Dhaka.

However, it was yet to hear from that country.

"NRL is virtually in the backyard of Bangladesh and the country will save a lot in transport costs if the diesel is supplied directly," sources added.

NRL was looking at selling to Bangladesh, diesel at Budge Budge, in West Bengal, by barge through the river route.

Commercial success

The commercial success of this venture would have led lead to export of diesel to Bangladesh through the river route besides exploring export opportunities in Myanmar.

Sources told Business Line that the company does not see NRL getting the status in the near future as exports to these two countries were yet to start. Besides, it would not be easy to get the Finance Ministry nod as the Ministry is unlikely to agree on non-dollar trade for considering such a proposal, sources pointed out.

Given the topographical difficulties in the North-East, sources said that it would be easier for NRL to access the Bangladesh, Bhutan, and Myanmar markets through road, rail and river.

The company is already exporting diesel in small quantities to Bhutan.

Both Myanmar and Bangladesh were dependent on imports for diesel and a part of their requirements could be met by NRL.

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