Reliance Industries (RIL) which last week surrendered the only for export status for one of its two refineries to enable domestic fuel sales, is all set to reopen its petrol pumps shut a year ago."They (Reliance) have informed us that they will now start opening their petrol pumps. I think they should be reopening outlets anytime now," a top Petroleum Ministry said on Monday.
Prepratory work is in progress and the first pump in Gujarat may start retailing petrol and diesel soon.
Reliance had a year ago shut its 1,432 petrol pumps as it couldn't compete with the subsidised rates of PSU retailers. With oil prices falling, the margins on auto fuel have turned positive again.
"The (old) refinery, which was operating as an Export Oriented Unit (EOU), will now operate as a non-EOU refinery with effect from 16th April to cater to increasing demand of petroleum products in the country," a company release said.
Reliance had captured 15 percent market share in diesel, selling about 4 million tons of fuel annually.
With the shedding of EOU status, the refinery with a processing capacity of 660,000 barrels per day will now be able to cater to both domestic and export markets efficiently, it said.
A company spokesperson declined to comment on reopening of petrol pumps.
Industry officials said Reliance may first decide on the joint venture it had sought with Indian Oil and Royal Dutch Shell for operating the closed pumps.
Reliance had sought to end the EoU status of its 33 million tonnes a year refinery, now known as J-1, by
making a formal application to the Finance Ministry. J-1 was converted into an EoU with effect from 16th April 2007 for three years to tap the clean fuel markets in Europe and US.
The EoU status, which was valid for three years till 2010, also enabled the company to avoid sale into domestic market which had become loss-making for the private refiner as it could not compete with subsidised rates of state-run firms.
Sources said Reliance will continue to export most of the fuel from J-1 but will also sell petrol and diesel in domestic market.
It may sell 2.5-3 million tons of diesel to public sector fuel retailers - Indian Oil, Bharat Petroleum and Hindustan Petroleum - to meet the deficit they are expected to have in 2009-10.
Though the margins on petrol and diesel had turned positive with the fall in international oil prices since October 2008, Reliance still could not sell fuel from J-1 through the petrol pumps as the EoU status made it prohibitive for the company to sell fuel locally.
The EoU status gave the company the benefit of duty free import of raw material crude oil and tax exemptions in exchange for exporting atleast two-third of the products.
As per the law, if an EoU has to sell fuel locally, customs and excise duty levied is doubled to make petrol and diesel dearer by Rs 9-10 a litre.
Public sector oil firms currently make a neat Rs 0.94 a litre profit on sale of diesel and but make a loss of Rs 1.64 on petrol sales.
When it was commissioned in July, 1999, Reliance availed of special tax rebates, including income tax holiday, sales tax and excise duty concessions, all of which had expired by 2007.
It converted the same refinery into an EOU since selling products like petrol and diesel in the domestic market is uneconomical due to subsidies.