NEW DELHI: The government is working on a proposal to make it mandatory for Reliance Industries’ (RIL) Jamnagar refinery - an export oriented unit (EoU) - to first meet domestic demand of petroleum products (mainly diesel) before exporting them.
According to the proposal, products sold from EoU refineries would get deemed export benefits. In other words, the refiner would not only be exempted from paying additional taxes but also its sales in domestic tariff area (DTA) would be counted against the company’s net foreign exchange earning (NFE) liability.
“As the proposal requires amendment of the foreign trade policy (FTP) and resolution of double taxation issues, we have sent it to the ministry of commerce and the finance ministry,” an official in the oil ministry said. When contacted, a RIL spokesperson said: “We do not wish to comment on speculations.”
RIL’s existing EoU refinery in Jamnagar has a 33 mn metric tonne per annum (mmtpa) capacity. The company exports its products to the US, European nations, Africa, Brazil, Argentina, Indonesia, Japan and many other countries.
As per the proposal, the supply from the EoU refineries would be limited to only three public sector companies - Indian Oil (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL). “If the FTP itself is amended, as proposed, the EoU refinery would be obliged to supply products to the (public sector) OMCs, in quantities specified by ministry of petroleum & natural gas, from time to time,” a source said.
It is learnt from official sources that RIL has agreed on supplying petroleum products from its EoU refinery provided it would not have to undertake the burden of any additional taxes (applicable to DTA sales).
At present, products sold from an EoU refinery to the DTA would attract Rs 2/litre additional duty of excise on petrol and diesel apart from the education cess. Petrol would also attract a special additional excise duty of Rs 6/litre, sources in the ministry said.
The proposed move is induced mainly due to unprecedented rise in diesel demand (over 17%) in the country.Samajwadi Party general secretary Amar Singh had also demanded revoking EoU status of the Jamnagar refinery due to the shortage of petroleum products in the domestic markets.
Reliance had converted its Jamnagar refinery into an only-for-exports unit, thereby getting tax incentives like exemption from payment of income tax and duty free import of raw material.
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