Rather than letting policy tangles halt its growth progress, RIL ‘quit India’ and eyed the world as the market for its refinery products, writes NARESH MINOCHA
Now look at what RIL did. Prior to transforming the Jamnagar refinery-cum-petrochemicals complex as an EOU, it floated Reliance Petroleum (RPL) to set up a 27 million tonnes per year refinery, along with a 90,0000 tonnes per year polypropylene (PP) plastic plant at the same site as an SEZ. Although the current SEZ scheme does not stipulate any value-addition norms, setting it up binds the promoter to export commitments, at least to maintain foreign exchange neutrality. For RPL, it meant higher exports of refinery products & petrochemicals.
In October 2007, RIL unveiled a proposal to set up a refinery-linked-petrochemicals complex to produce 2 million tonnes of olefins annually, including daily-use plastics. It also announced a proposal to set up the world’s largest integrated combined-cycle coke gasification complex within the SEZ to produce power and petrochemicals. The plan was to invest Rs.600 billion on the SEZ. According to a recent project report, the proposed SEZ complex has the potential to earn a net foreign exchange of $23-26 billion over a 10-year period. The figure does not include export earnings of the Jamnagar EOU in the past seven years. It clocked Rs.64.10 billion in exports in the first year of its operations in 2000-01. And today, it has emerged as India’s largest manufacturer-exporter. All this leads us to a few basic questions: would RIL have achieved this feat if it had the freedom to market its refinery products in the domestic market? Would it have amplified its global vision for exports subsequently?
The answers to the questions can be traced to policies for dismantling controls in the oil & gas sector notified on November 21, 1997. Under them, controls were to be phased out by March 31, 2002. On February 26, 1999, the Ministry of Petroleum & Natural Gas took note of refinery projects proposed by Reliance & Essar Oil Limited (EOL). The ministry stated that “RPL/EOL would be treated at par with other PSU/JV refineries… in the matter of off take of their controlled products during the transition period.”
Now look at what RIL did. Prior to transforming the Jamnagar refinery-cum-petrochemicals complex as an EOU, it floated Reliance Petroleum (RPL) to set up a 27 million tonnes per year refinery, along with a 90,0000 tonnes per year polypropylene (PP) plastic plant at the same site as an SEZ. Although the current SEZ scheme does not stipulate any value-addition norms, setting it up binds the promoter to export commitments, at least to maintain foreign exchange neutrality. For RPL, it meant higher exports of refinery products & petrochemicals.
In October 2007, RIL unveiled a proposal to set up a refinery-linked-petrochemicals complex to produce 2 million tonnes of olefins annually, including daily-use plastics. It also announced a proposal to set up the world’s largest integrated combined-cycle coke gasification complex within the SEZ to produce power and petrochemicals. The plan was to invest Rs.600 billion on the SEZ. According to a recent project report, the proposed SEZ complex has the potential to earn a net foreign exchange of $23-26 billion over a 10-year period. The figure does not include export earnings of the Jamnagar EOU in the past seven years. It clocked Rs.64.10 billion in exports in the first year of its operations in 2000-01. And today, it has emerged as India’s largest manufacturer-exporter. All this leads us to a few basic questions: would RIL have achieved this feat if it had the freedom to market its refinery products in the domestic market? Would it have amplified its global vision for exports subsequently?
The answers to the questions can be traced to policies for dismantling controls in the oil & gas sector notified on November 21, 1997. Under them, controls were to be phased out by March 31, 2002. On February 26, 1999, the Ministry of Petroleum & Natural Gas took note of refinery projects proposed by Reliance & Essar Oil Limited (EOL). The ministry stated that “RPL/EOL would be treated at par with other PSU/JV refineries… in the matter of off take of their controlled products during the transition period.”
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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