Reliance seeks EOU status for Jamnagar refinery

Mumbai: Mukesh Ambani flagship Reliance Industries Ltd has sought export oriented unit (EOU) status for its refinery in Jamnagar, Gujarat, a status that would allow the company import crude oil duty-free.

Reliance has applied to the commerce ministry for grant of EOU status to its refinery, government sources said.

RIL subsidiary Reliance Petroleum Ltd is already building an export-oriented 29-million tonnes a year refinery adjacent to Reliance Jamnagar refinery. The new refinery is likely to be completed in 2009.

The company, which has been in operation since July 1999, received incentives like income tax holiday and sales tax deferment during its initial years of operation.

But, now, the company is finding it uneconomical to sell petroleum products like petrol and diesel as it has to compete with public sector refiners and distributors who receive subsidy from the government.

Public sector oil companies like Indian Oil Corporation, Hindustan Petroleum and Bharat Petroleum have been able to keep fuel prices way below the cost as they got oil bonds and discounts from crude oil producers like ONGC to make up for the loss.

Reliance and other private retailers like Essar Oil and Shell, do not get such concessions.

Converting the refinery into an export oriented unit would make available tax concessions that export houses are eligible for.