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Reliance seeks extension of IOC deal
October 27, 2003 18:30 IST
India's only private sector oil refiner, Reliance Industries, has sought a two-year extension of its agreement with Indian Oil Corp to sell Jamnagar refinery products through the state-run firm's retail network.
Reliance, which presently does not have a retail network of its own, sells 13.1 million tonnes of petrol, diesel, LPG and kerosene to state oil firms IOC, Bharat Petroleum Corporation and Hindustan Petroleum Corporation.
The firm's take-or-pay contract ends on March 31, 2004.
"They want to extend the contact till 2006 by when a sizeable number of Reliance's 5849 petrol stations are likely to be in place," IOC sources said.
The state oil firms pay RIL import parity price for the product they lift till March 31, 2004. IOC has another five-year flexible contract where unlike the take-or-pay clause in the current agreement, Reliance would offer products at the lowest alternate source price viz landed cost of imported fuel or the price offered by any other refiner.
"Reliance wants that the take-or-pay agreement is extended for another two years. This would for all practical purposes mean that the agreement for period 2004-09 is first rescinded," sources said, adding IOC was averse to entering into strict take-or-pay kind of agreement.