OMCs made to share aviation fuel facilities

RIL, Shell and Essar will now be able to use state-run companies' storage facilities near the Delhi airport

In what could open the aviation turbine fuel (ATF) market for private companies, the state-run oil marketing companies (OMCs) have agreed, in-principle, to share their storage facilities to feed Asia's largest terminal at New Delhi.

The decision was taken during a meeting between aviation and petroleum ministries last week, a senior government official told Business Standard.

With this move, private ATF sellers will get overnight access to assets created by government firms, said a senior executive with an OMC.

Reliance Industries Ltd (RIL), Shell and Essar, which had shown interest in selling ATF, will now be able to use state-run companies' infrastructure built near the Delhi airport, for a fee. RIL has operations across 26 terminals in India and wanted entry into terminal-3 of the Indira Gandhi International Airport.

"The access will be allowed only if the government-controlled OMCs have excess capacities," said a petroleum ministry official.

Around 52 per cent of the ATF is consumed in Delhi and Mumbai airports, with 15 per cent of it supplied by private players. The private players can use the facility only for duty-free ATF, said the ministry official. "One private company had approached the excise department, too, for using the storage capacity to provide service for one of their clients. The response was that both duty-free fuel and duty-paid fuel cannot be kept at one place," said the official.

OMCs are yet to receive a formal directive in this regard, said an IndianOil executive. Although discussions have been going on for quite some time, state-run companies never wanted private players to play a crucial role at Delhi and Mumbai. "In all other airports, we have our own facilities. This is for the first time that we would be using infrastructure of public sector units," said a private oil company executive.

Privatisation for Delhi airport started way back in 2006, when Delhi International Airport Ltd (DIAL) was formed by the GMR group, the Airports Authority of India, Germany's Fraport AG, and Malaysia Airport Holdings. For a fuel farm at terminal-3, Delhi Aviation Fuel Facility Ltd (DAFFL) - a joint venture between Indian Oil Corporation, Bharat Petroleum Corporation Ltd and DIAL - was also formed later. Currently, only IndianOil Skytanking and Bharat Stars Services have the right to provide into-plane refuelling.

"ATF costs contribute 45 to 50 per cent of the input costs of the airlines. This is a welcome step as competition will help bringing down ATF costs. However, at Mumbai airport, ATF is directly coming from refineries in pipelines to the airport," added the aviation ministry official.