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MUMBAI, April 8

ESSAR Oil plans to import an initial parcel of 20,000 tonnes of diesel in May for selling in the local market, a senior company official said.

This would mark the entry of Essar in the petroleum products market, though the fuel would be supplied to bulk consumers.

Under the new Exim Policy, private refiners with marketing licence are permitted to import petroleum products directly. So far, import of petrol and diesel were canalised through Indian Oil Corporation, the official said.

"We are talking to overseas traders and if everything goes as planned, an initial parcel of 15,000-20,000 tonnes should land by the first half of next month," said Mr Raj Varma, CEO, Marketing, Essar Oil Ltd.

The company has identified about 25 bulk consumers and some had already indicated their requirements, Mr Varma said. "We would bring the product either at Kandla or Mumbai port depending on where we get the handling and storage facilities," he said.

"Prices are currently high, but it doesn't matter so long as we can match the prices of local refiners," Mr Varma said.

However, oil sector analysts are of the view that Essar would find it difficult to match the local price, as there is a 20 per cent duty on imported product. Besides, given the excess supply situation in the domestic market, local refiners may undercut any importer-supplier. "Essar would not have the flexibility to match the local price unless it is bringing specialised products not easily available in the local market," said an oil sector analyst with an investment bank.

Though Essar had received marketing licence six months ago, it could not tie up for supply of products. Indian refiners reportedly did not entertain Essar's request.

However, the company has again approached Indian oil companies for regular supply of products for retailing through its proposed network.

Essar has to depend on local refiners or imports until its own refinery is commissioned.

Work on Essar's proposed refinery in Gujarat has been held up for the past four years. Meanwhile, the company is busy setting up a network to retail petroleum products.

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