This matched with the domestic market becoming unprofitable since RIL could not match the artificially low prices state-run refiners were offering under government orders. Whilst the government made up the state-run firms’ losses through center’s IoUs, private companies such as RIL had no such cushion.
On the contrary, export markets looked more lucrative. Around the same time, the term of special tax rebates, as well as income-tax holiday, sales tax and excise duty concessions, which it had been given during the commissioning of the plant, had also come to an end. The export status involved duty-free import of crude, which was also later extended to state-run refiners, and other fiscal benefits but made domestic sales prohibitive because of double taxation.
Sources said RIL would carry on exporting most of the fuel from this unit but would also have the choice to sell fuels in the domestic market. It has begun another export-only unit next to the old plant.
The domestic market has been beneficial for petro-retailers for sometime now and according to petroleum secretary R S Pandey, demand is likely to grow by 4-5% in 2009. But the condition could be changing as crude climbs to $50-plus a barrel. Latest data showed that oilmarketing firms are making only 94 paise on a liter of diesel and are currently back to losing INR1.64 on a liter of petrol.
Thus, RIL may begin with, if and when it decides to revive the petrol pumps, diesel sales. After it entered domestic petroretailing, the company had cornered around 15% market share.
