The Hindu Business Line : Govt may not issue directions to refiners on kerosene output

WITH the oil marketing companies (OMCs) reaching an understanding with the standalone and private sector refiners on increased supply of kerosene (SKO) for meeting the public distribution system (PDS) demand, the Government may not be required to invoke the Essential Commodities Act to order that seven per cent of all refinery output should be SKO.

The Ministry of Petroleum and Natural Gas has been contemplating directing the standalone refineries, including private sector units, to raise their SKO output under the Essential Commodities Act.

According to sources, while the Petroleum Ministry has the powers to issue directions under the Act, the Law Ministry felt that it is obligatory to hear the oil refining companies before issuing such an order.

The Petroleum Ministry had then asked the OMCs to discuss and negotiate the quantity and discount to be offered by the refiners to ease the marketing companies' subsidy burden.

In fact, the Ministry had held that in case negotiations were successful, then it might not take recourse to either of the two options — directing refiners to produce SKO under Essential Commodities Act or ask them to canalise export of jet kero to increase the availability of kerosene under PDS.

The allocation of PDS kerosene during the first half of 2005-06 was broadly at the same level as 2004-05.

Therefore, to meet demand for the balance period of the current year from indigenous production and not from imports, Reliance Industries Ltd (RIL) and Mangalore Refinery and Petrochemicals Ltd (MRPL) were requested to maintain supplies of SKO for 2005-06 at the same level as in 2004-05.

While RIL has agreed to maintain supplies during the current year at minimum of the level supplied by it in 2004-05, the balance requirement for the year is to be met by supplies from Indian Oil Corporation, Bharat Petroleum Corporation, Hindustan Petroleum Corporation and MRPL and the required uniform percentage of their crude throughput.

RIL has agreed to supply 1.13 million tonnes (mt) of SKO and 26 mt of liquefied petroleum gas. However, the discount is still being worked out.

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