RIL may get tax break on diesel

The Centre may grant Reliance Industries Ltd (RIL) a tax break to encourage it to sell diesel in the domestic market to meet demand.

“By December, a view may be taken,’’ Oil Secretary R S Pandey said in an interview at his office in New Delhi. Under a proposal backed by the ministry, RIL would supply the fuel to state-run refiners, including Indian Oil Corporation (IOC), which imports diesel to meet the shortfall.

Diesel production by state refiners hasn’t kept pace with country’s demand, which rose 18 per cent in the April-June period, resulting in shortages. RIL enjoys tax benefits for earning foreign currency on exports from its 660,000 barrel-a-day Jamnagar refinery, the world’s third-biggest. “Buying from Reliance will reduce supply constraints,’’ said Vinay Nair, an analyst with Khandwala Securities Ltd in Mumbai, who recommends investors to buy the stock.

“This will work well for Reliance as long as it is compensated.” RIL spokesman Paresh Chaudhry didn’t immediately respond to an e-mail seeking comments. A delayed monsoon cut hydropower output and increased demand for diesel-run generators, according to the state-owned IOC, the country’s largest refiner. India is Asia’s third-largest energy consuming nation.

Buying from Reliance would help state-refiners save on transportation costs and taxes incurred on diesel imports.