Worlds Apart? – The Sectoral Divergence in the Indian Petroleum Refining Industry

Related Vendors

EDL Anlagenbau Gesellschaft mbH

Pörner Ingenieurgesellschaft mbH

ProMinent GmbH

India Exports 63.4 Million Tons of petroleum Products

The public sector refiners mainly sell into domestic market and the private sector refiners export significant quantity of their products to international markets. Indian refiners exported a total of 63.4 million metric tonnes (MMT) of petroleum products in 2012-13. Out of this, 46.8 MMT was exported by the private sector and just 16.7 MMT by the public sector. Thus, the private sector’s contribution to total export was nearly 74 per cent while the public sector’s contribution was just about 26 per cent.

Further, the private sector exported nearly 59 per cent of its installed capacity whereas public sector just about 12 per cent. The private sector’s higher export is due to its ability to produce international quality products and also the price control on regulated products as stated earlier. Indian refineries have surplus capacity. Therefore, excess of petroleum products over that consumed in the domestic market has to be exported.

A Divided Market

Public sector refiners are compensated by the state and state-owned up-stream oil and gas companies for selling the regulated products at below cost-prices, but, private sector refiners don’t get similar compensation. Thus, public sector refiners are at a competitive advantage to sell those products in the domestic retail market. Therefore, most of the exports (surplus capacity) come from the private sector.

* The author is Chief Engineer (Process) at Saipem India Projects

(ID:42473260)