In a major boost to oil majors aspiring to tap the retail oil sales market worth $15 billion a year, the government on Monday allowed marketing licence holders to import petrol and diesel.

The Export and Import Policy for 2003-04, made public on Monday, decanalised the import of petrol and diesel for firms holding a retail licence. However, the two products would continue under the state trading list for others.

The government has till now granted licence to Reliance Petroleum, Essar Oil, Oil and Natural Gas Corporation and Numaligarh Refineries Ltd for authorisation to market transport fuel.

World's third largest oil group Royal Dutch Shell's application for setting up 2000 petrol stations was still pending.

A separate notification issued by commerce and industry ministry said the provision of allowing imports through state canalising agency Indian Oil Corporation has now been replaced to allow all companies granted rights for marketing of transportation fuel.

The move is a shot in the arm for Essar Oil, whose ambitious plan to set up 1700 petrol stations has been obstructed as IOC refused to import petrol and diesel for it, while the group's 10.5 million tonne refinery in Gujarat is yet to be completed.

Expressing happiness at the long awaited policy change, Essar Oil CEO Raj K Varma said that the company would still prefer to enter into medium/long term supply arrangements with local players to source products for its petrol stations.

Though the crude oil imports had been de-canalised last year, petro product imports remained under canalised category as imported petrol and diesel could be sold at a cheaper rate under the given duty structure.

A senior Shell India official said the company would go ahead with its retail plan for setting up 2,000 petrol stations by sourcing petroleum products from domestic refiners.

Shell application for retail licence is pending with the petroleum ministry.

Varma said: "We have been seeking this change in the import policy and now that the good news has come, we are extremely happy. With this, the government has taken one more positive step in the process of deregulating the oil industry."

"While we would still prefer to enter into medium/long term supply arrangements with local players, this change gives us a comfort that we could resort to imports, as and when required, to maintain uninterrupted supply lines to our retail network being developed as well as to bulk/industrial consumers," he added.

ONGC officials said the policy change was a comforting factor for the company, which has authorisation to set up 600 retail outlets in four states.

"We can begin retailing through imported fuel immediately but our plans are based on sourcing fuel from domestic refineries."

The company plans to source fuel from its subsidiary Mangalore Refineries and Petrochemicals Ltd.

Reliance, which has an authorisation to set up 5,849 petrol stations throughout the country, has plans to source fuel from its 27 million tonne Jamnagar refinery.

The Exim Policy 2003-04