BP stopped from entering jet fuel market

NEW DELHI: British energy major BP plc appears to be experiencing "bad karma", an expression hippies used in the sixties to philosophize on their run-ins with authorities in India.


After much ado, BP recently had to join an arbitration process against the Centre on gas pricing, much against an unspoken corporate philosophy to never get into a fight against the government of the land.

Now, its desire for a pie of the lucrative aviation fuel market has been blocked. The oil ministry has rejected its application for a licence, saying it did not fulfill conditions for retailing transportation fuel.



The ministry had on March 8, 2002 said companies wishing to sell transportation fuel must own and operate a refinery with an investment of at least Rs 2,000 crore and such investments must be made, or proposed to be made, in the form of equity or similar instruments such as convertible debentures.

But, BP described the development as an ongoing exercise. "BP has had positive discussions with the ministry regarding our application for obtaining license for ATF (aviation turbine fuel or jet kero) marketing in India. We are confident we meet the requirements and are working closely with the authorities to complete documentation," a company spokesperson said.

BP submitted its application on December 9 through BP Explorer (Alpha) Ltd, the same subsidiary that has invested in the KG-D6 gas field operated by Reliance Industries Ltd off the Andhra coast that is in the eye of the gas pricing storm.

After lengthy discussion with ministry officials, BP on January 24 clarified it would transfer the authorization to a proposed Indian entity, BP (Indian Co), that would be formed after the licence was granted.

In its clarification to the ministry, BP said it has 30% stake in 21 oil and gas production sharing agreements in India worth an investment of Rs 43,258 crore. In addition, BP has invested some Rs 3,000 crore in exploration business in the last three years.

BP has an MoU with state-run IndianOil Corporation for collaboration in jet fuel retailing. IndianOil has the largest ATF service network. The government is also in the process of opening up the aircraft refuelling infrastructure of public sector retailers for private players on tolling basis.