Deemed export boon for refineries

Mini Exim Policy has extended deemed export benefits for supplies to refineries of the Ninth Plan which have spilled over to the Tenth Plan. This would benefit at least three major grassroot refineries — IOC’s Paradip refinery, BPCL’s Bathinda refinery and HPCL’s Bina refinery.
All these refineries were projects planned in the earlier plan period but have been delayed as there has been a sharp drop in demand for petroleum products. The current refining capacity of 110 million tonnes is already more than the total domestic consumption. Companies like Reliance, MRPL and even BPCL have had to export petro-products incurring export losses.
The Essar group’s refinery project for which a large part of the work is already underway may not get the full benefits. Most of the other refineries, however, have a long way to go as demands for petro-products have been falling and most of the companies have adopted a policy to “go slow�. Said an official in one of the oil companies: “With the heavy decline in demand for major products like diesel, investing money in grassroot refineries may not be the best decision. Although, proposals have been drawn up and in some cases, even ground work done for putting up the refineries there is no great hurry.� However, a deemed export status for the supplies would translate to direct cost reductions which would make the refineries more competitive.