State-run oil firms to form JV for jet fuel

State-run oil marketing companies Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) are set to form a joint venture to manage fuelling facilities at all airports controlled by the Airports Authority of India (AAI) by the end of this year. AAI is also likely to be an equity partner in the JV.

The public sector OMCs have, however, spurned private fuel retailers. "There will be no private parties in the venture. However, it may follow an open access system to all fuel suppliers, where anybody can pay and use these facilities," said a source close to the development. This comes at a time when Mukesh Ambani-led Reliance Industries (RIL) approached the petroleum ministry and the AAI to be part of the JV.

The venture will cover majority of the fuelling facilities in India, except Delhi, Mumbai, Hyderabad and Bengaluru, where private parties are also involved. IOC, which owns more than 60 per cent of the aviation turbine fuel market, is likely to hold 37.5 per cent stake in the venture, while AAI will get 25 per cent and the remaining two oil companies will have 18.75 per cent each. "The venture will be in place by the end of this year," confirmed Balwinder Singh Canth, director (marketing) of IOC.

According to an official, inclusion of a private player would have changed the very nature of the JV. RIL already sells ATF in many airports but lack of infrastructure has constrained private companies from selling at big airports.

IndianOil Aviation Service refuels 1,750 flights every day. While AAI was keen on roping in private players, OMCs stood against the proposal. "RIL has formally approached us, too. However, the final decision will have to be taken by the aviation ministry," said a petroleum ministry official. Private players like RIL and Essar Oil have only five per cent share in the ATF market.

According to a report by the Petroleum Planning and Analysis Cell (PPAC), the cumulative growth in consumption of ATF was 12.1 per cent during April-June this year, due to a rise in air traffic.

Domestic airlines carried 7.93 million passengers in June 2016, 20.2 per cent more than June 2015. Recently, the ministry of civil aviation came out with integrated civil aviation policy. "The key objective of the policy is to take flying to the masses by making it affordable and convenient along with establishing an integrated eco-system that will lead to significant growth of the sector in the longer term which in term signals a positive outlook for the demand of ATF in the coming months," the PPAC report said.