RIL plan to supply jet fuel to Mumbai airport using OMC pipelines faces hurdles

Mumbai: State-owned fuel marketers are pushing back against a regulatory suggestion to allow Reliance Industries Ltd (RIL) to use their pipelines to sell jet fuel at the Mumbai airport.

Currently, the three public sector oil marketing companies — Bharat Petroleum Corp. Ltd (BPCL), Hindustan Petroleum Corp. Ltd (HPCL) and Indian Oil Corp. Ltd—fuel all aircraft at Mumbai’s Chhatrapati Shivaji International Airport through two pipelines from their refineries. RIL had written to the Petroleum and Natural Gas Regulatory Board (PNGRB) in November 2016 to declare these pipelines “common carriers” which would allow it to access them. On 4 May this year, the board suggested the same in a notice seeking public opinion, but OMCs are not giving up without a fight.

BPCL and HPCL say PNGRB did not consult them, and does not have the authority to impose any direction.

“Though BPCL owns the pipeline, PNGRB has not heard BPCL’s view on the matter. The ATF pipeline is outside the scope and purview of the PNGRB Act and as such, PNGRB does not have the jurisdiction to declare the ATF pipeline as a common carrier,” said BPCL in its reply.

A common carrier system implies that the capacity in a pipeline over and above the owner’s own requirement can be made available to any other entity if not fully utilized by the owner. This can be done on an annual contract basis.

Officials from HPCL and BPCL said on the condition of anonymity that if need be, they will have to take the legal route on this matter.

RIL and BPCL did not reply to an email sent. HPCL declined to comment.

A 2002 government notification says a pipeline less than 300 km is granted right of use treating it as a “captive pipeline”.

“Therefore, pipelines such as BPCL’s ATF pipeline which is 15 km long (being a pipeline of a length of less than 300 km) is a captive pipeline, a dedicated pipeline and therefore outside the scope and ambit of a common carrier and beyond the jurisdiction of the PNGRB,” said BPCL in its reply to PNGRB.

At present, the entire ATF demand of 1.4 mmtpa (million metric tonnes per annum) at the Mumbai airport is met by the three OMCs. Indian Oil, along with BPCL and HPCL, has a joint venture company called Mumbai Aviation Fuel Farm Facility Pvt. Ltd for the ATF supply. Airlines at the Mumbai airport consume more than a fifth of the India’s total jet fuel requirement.

RIL plans to ship ATF from its Jamnagar refinery to the Pirpau Jetty in Trombay, and then use the pipelines to transport the fuel to the airport.

RIL in its 2016 letter to PNGRB had said that in the absence of competition, airlines are not able to enjoy the benefit of competitive prices.

“The three oil marketing companies are enjoying a monopoly to the exclusion of all other ATF marketing companies (OMCs) in the supply of ATF at the Mumbai airport. This resulted in entry barrier to other authorized ATF suppliers. It has deprived the airlines' customer of the benefit of effective competition at the airport in effect impacted the cost to passengers at large."

According to the letter, BPCL has 70.8% of capacity remaining in its pipeline.