Reliance Industries allowed to sell LPG to private marketers

The Mukesh Ambani-led Reliance Industries Ltd (RIL) has been permitted to sell up to 120,000 tonnes of its LPG (cooking gas) output to private cooking gas marketers as per a government order.

The petroleum ministry order, valid from April 1, 2015 to March 31, 2016, is, however, subject to RIL importing an equivalent quality for supplying to state-run oil marketing companies (OMCs).

According to the order, RIL will have to import an equivalent quantity and deliver it to state-run OMCs at a cost-neutral or cheaper price.

The ministry's LPG control order mandates that all domestically-produced cooking gas must be supplied to state-run companies. However, under the Parallel Marketing Scheme (PMS), private companies are allowed to import and market cooking gas to bulk consumers.

RIL has been permitted to sell up to 10,000 tonnes per month to private marketers, while arrangement would be valid till the LPG import facility at Kandla Port in Gujarat is re-commissioned or March 31, 2016 or till further orders, whichever is earlier.

The government had, in February 2014, asked RIL to stop retailing cooking gas produced in its Jamnagar, Hazira and Patalganga plants.

The company supplies cooking gas to 1 million, mostly rural, customers, and to 134 auto LPG outlets.

RIL had contested the order, saying it was selling domestic LPG in the market because state-run OMCs were not willing to pay market rates.

The company said the move to prohibit the company from marketing gas would deprive its rural customers, mostly in Gujarat, Maharashtra, Rajasthan and Madhya Pradesh.

Following the RIL representation, the petroleum ministry in August last year permitted the company to sell up to 10,000 tonnes per month of cooking gas to parallel marketers till March 31, 2015, which period has now been extended till March 2016.