The government may permit Reliance Industries Limited to export surplus LPG from the west coast and allow it to import on the deficit east coast to make huge savings on freight cost.
"RIL's domestic realisation should at least equal their export realisation failing which they should be allowed to export a part of their production, after meeting their domestic obligations," a petroleum ministry note said.
Currently, export of LPG is not permitted and RIL has to sell LPG produced at its Jamnagar refinery in Gujarat to public sector oil marketing companies. During the lean demand period of April-September, OMCs do not take the entire RIL produce.
"It is a fact that the export option is better economically for RIL in view of the prevailing high prices in the international market, while domestically the prices are controlled and RIL is not compensated for domestic sales as the PSUs are for their under-recoveries,"
At a recent industry meeting convened by the Petroleum Secretary, RIL President P Raghavendran suggested that RIL may be allowed to import LPG in the deficit East Coast and export equivalent quantum of LPG from the surplus Jamnagar refinery.
Currently, LPG is moved from west to east coast and involves huge freight and accepting RIL's suggestion would save Rs 900 per tonne.
Sources said the cost of import on the east coast was about $20 per tonne cheaper than exports from Jamnagar as FOB Thailand spot LPG price was lower than the Saudi price during the past five years.
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