Millennium Post

Govt rejects BP application for ATF retail sales licence

Government has rejected BP plc’s application for selling jet fuel to airlines on the ground that its investment does not qualify to get a retailing licence, Oil Minister Dharmendra Pradhan said on Monday.  BP Exploration (Alpha) Ltd, a wholly owned subsidiary of BP plc, had on June 11, 2014 submitted an application for authorisation to market aviation turbine fuel (ATF) claiming to have invested $477 million in the country. 

The Oil ministry in March wrote to Europe’s second  largest oil company saying that its $477 million investment in India till date does not qualify it to begin selling jet fuel to airlines. “To get marketing rights for transportation fuels, namely petrol, diesel and ATF applicant must meet the requirements... 

The requirements interalia, include investment or proposed investment of Rs 2,000 crore in exploration or production, refining, pipeline or terminals leading to additionality to the existing assets and/or creation of new assets in the eligible activities,” Pradhan told the Lok Sabha. In a written reply to a question, he said that of the $477 million BP claimed to have invested in India, $259 million was said to a capital investment and another $2.3 billion was proposed to be further invested.

“With reference to this application dated June 11, 2014, Directorate General of Hydrocarbons (DGH) has reported that BP share of expenditure was $508 million between 2011-12 and 2013-14 of which the capital expenditure (capex) component and operational expenditure (opex) component is $171 million and $337 million respectively. 

“This did not meet the joint requirements of the Clause 3(I) and 3(IV) of the Marketing Resolution dated March 8, 2002 and thus the application dated June 11, 2014 was rejected,” he said. BP’s $7.2 billion spending in buying 30 per cent stake in 21 exploration blocks of RIL is not being considered as capital investment. 

BP spokesperson had on March 30 stated that it has been “continuously engaging with the ministry of oil and natural gas regarding the licensing application and we are confident of meeting the requirements. We will continue to work closely with government authorities and urge them to review the decision”. BP is keen to enter the booming aviation market in Asia’s third-largest economy where ATF demand is expected to rise by 3-4 per cent annually.

Centre to form coal evacuation JVs with mineral-rich states
The government on Monday said it will form JVs with mineral-rich states for faster evacuation and transportation of coal to fuel power plants and make available cheaper electricity for the people. It was stated at the signing of a pact between the Coal Ministry, the Railways Ministry and the Odisha government to form a joint venture (JV) for identifying projects for evacuation of coal through rail. 
The Coal Ministry or its PSU will hold 64 per cent stake, Ministry of Railways or its PSU 26 per cent and the Odisha government will have a 10 per cent equity in the JV, which will have an authorised capital of Rs 1,000 crore. The JV will undertake projects worth Rs 3,689 crore that includes rail corridors of Brundamal-Jharsuguda, Sambalpur- Talcher, Sambalpur-Titlagarh and Raipur-Titlagarh doublings and Champa-Jharsuguda line among others. Both, Coal Minister Piyush Goyal and Railways Minister Suresh Prabhu said it is a mega step towards affordable power generation.

“An MoU (Memorandum of Understanding) has been signed for a JV among Railways Ministry, Coal Ministry and Odisha government in line with Prime Minister Narendra Modi’s dream for a team India for development projects,” Goyal said. Terming the JV a “win-win partnership for all” Goyal said through it a new history was being created in which various departments and ministries of the centre and states would work “as an organic entity to serve the nation and its people”. Odisha will stand to benefit tremendously as on account of more coal and minerals transportation from there it stands to benefit from huge royalty and auction revenues, he added. 
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