— According to a recent government order, the leading private conglomerate, Reliance Industries Limited has been given a nod to sell a maximum of 1.2 lakh tons of its output from cooking gas. The Mukesh Ambani-led company is permitted to sell the Liquefied Petroleum Gas (LPG) output to private cooking gas marketers.
Specifications of the order
The order came from the Ministry of Petroleum and Natural Gas. It is valid from 1st April, 2015 to 31st March, 2016. The order is subject to Reliance Industries importing similar quality for supplying to oil marketing companies (OMCs) that are operated by the State. The company will have to import same quantity of produce and provide it to the state-run OMCs at the same or lower price.
The order states that all the cooking gas produced in the country should be given to the public oil companies. This is because LPG production in India is lower than its requirement. However, as per the Parallel Marketing Scheme (PMS), private companies in India may import and market the cooking gas to bulk consumers.
Reliance Industries is allowed to sell cooking gas produce up to 10,000 tons a month to private marketers. This validity will end at the end of FY 2015- 2016 or till its LPG import facility at Kandla Port in Gujarat is re-initiated or till any further orders are given. The Ministry had issued the order in August 2014 and its earlier validity was 31st March, 2015.
The order from the Ministry stated, “Since the earlier notification dated August 6, 2014 was expired on March 31, 2015, this notification is being issued with effect from April 1, 2015 to give continuity to the notification dated August 6, 2014. No one is adversely affected by giving retrospective effect to this notification.”
Impact on business of Reliance Industries
Reliance Industries is the biggest single location LPG producer in India. It has a vast network and provides cooking gas to around 10 lakh customers. The majority of these are rural customers. The company also supplies cooking gas to 134 auto LPG outlets. Currently, 183 parallel LPG marketers are present in India.
Reliance Industries had earlier opposed the government’s order. It said that it was giving domestic LPG to private companies as there was no such rule prohibiting this and State-run OMCs did not agree to pay at the market rate.
The subsidiary of Reliance Industries, LPG Infrastructure India Limited (LIIL) is undertaking parallel marketing of LPG. It has a notable number of customers. It informed the Ministry that the order to restrict Reliance Industries from marketing the cooking gas will deny fuel to its rural customers. The customers in rural areas of Gujarat, Madhya Pradesh, Maharashtra and Rajasthan will be adversely affected.
In February, last year the government had asked Reliance Industries to cease the retailing of cooking gas produced from its plants at Jamnagar, Patalganga and Hazira.