The government is planning to change rules related to foreign grade policy and also special economic zones (SEZs) that would enable refineries set up as export-oriented units or as part of SEZs to sell petroleum products in domestic markets without paying extra taxes or duties.
In its communiqué dated January 9, the Petroleum Ministry has asked the ministries of finance and commerce which decide on these matters to expedite action on this.
An immediate beneficiary of this move would be Reliance Industries Ltd (RIL), which is at present the only company to have a refinery in the SEZ as also as an EOU. In the current market, Reliance is obliged to export all its products despite squeezed conditions.
However, if the proposal comes through, Reliance can sell it products only to public sector oil companies — IOC, BPCL and HPCL.
Reliance currently has 1500-odd petrol pumps in the country, which it shut last year when crude prices touched a high but local firms were hit by government-suppressed retail prices.
An official, who did not want to be named, said that to allow Reliance to sell the production from its EOU/SEZ refineries at its petrol pumps, the government will have to give a special permission.
“This would mean that the entire sales of petrol and diesel by Reliance be counted as foreign exchange earnings, even if the realisation is in Indian rupees. This seems unlikely at the moment,” he said.