The Hindu Business Line : Oil Ministry may seek changes in Exim Policy

What they say
According to OMCs, the infrastructure currently available with them was inadequate to import additional quantity of 2.6 million tonne per annum of LPG being supplied by RIL.
RIL has said that it proposes to continue supply to OMCs similar to the existing pricing basis at no extra cost under the international bidding route.

New Delhi May 2 Faced with a piquant problem on the supply of liquefied petroleum gas (LPG) to oil marketing companies (OMCs) from Reliance Industries Ltd's (RIL) Jamnagar refinery, the Petroleum Ministry plans to seek changes in Exim Policy to permit refiners with export-oriented unit (EoU) status to sell LPG with deemed export benefits.

At a recent meeting to deliberate on the purchase of LPG from RIL, the private sector refiner expressed apprehensions that unless the international competitive bidding process was adopted, it could be denied duty exemptions on import of raw material. Sources said that the Petroleum Ministry has directed OMCs such as Indian Oil Corporation Ltd (IOC) to examine the changes suggested by RIL in the Exim Policy before approaching the Commerce Ministry.

Deemed exports refer to transactions, which substitute for imports and under which the goods supplied do not leave the country and the payment is received either in Indian rupees or in free foreign exchange. The recently acquired EoU status would exempt RIL from paying local taxes, making it eligible for zero duty on crude imports for the refinery.

After getting the EoU status for its Jamnagar Refinery, RIL approached the Petroleum Ministry with a proposal to supply LPG to state-owned marketing companies under the global bidding route as required under the Exim Policy. Opposing the proposal, the OMCs are understood to have said that a positive net foreign exchange status could be achieved by the refiner through LPG supplies to PSU marketing companies, which are entitled to duty free import of the product under the General Exemption Notification issued by the Finance Ministry.

The OMCs also argued that the infrastructure currently available with them was inadequate to import additional quantity of 2.6 million tonne per annum (mtpa) of LPG being supplied by RIL. Besides, the OMCs would end up incurring additional cost in case domestic supplies from RIL are replaced by imports.

RIL, on its part, is understood to have said that it proposes to continue supply to OMCs similar to the existing pricing basis at no extra cost under the global bidding route.

The country needs over 10 million tonne of LPG per annum, which is met through domestic production and imports. RIL's production accounts for over one-fourth of the country's total LPG production. Domestic LPG production stood at close to 7 mt and the rest is imported.

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