Reliance Industries Ltd has sought
access
to
pipelines
and storages that public sector oil companies have built over the years for supplying jet fuel (ATF) from depots and oil refineries to airports, as it looks for a larger pie of
fuel trade
at some of Asia’s busiest airports.
Reliance, which produces a fourth of India’s aviation turbine fuel (ATF), wants access to
storage
depots outside the Delhi
airport
as well as to pipelines leading to Mumbai, Bengaluru, and Hyderabad airports.
It currently supplies small volumes of ATF when compared with supplies made by state-owned firms.
The firm made the suggestion in its comments to oil regulator PNGRB’s draft regulation calling for supply of ATF in all existing and future airports through pipelines that can be accessed by any supplier so as to bring in
competition
and cut fuel
cost
.
While the fuel market is open, airplanes at the country’s busiest airports are fed by pipelines that were built by state-owned
Indian Oil Corporation
(IOC),
Bharat Petroleum Corporation Ltd
(BPCL) and
Hindustan Petroleum Corporation Ltd
(HPCL) over decades.
Reliance, which has been for more than a decade now seeking access to pipelines that supply ATF to airports especially at Mumbai, stated that “the common carrier pipeline scope (which gives third parties access to pipelines built by PSUs) should encompass the associated storage facilities and pumping stations at the ‘off-site’ oil terminal facilities as they form an integral part of the ATF supply chain.”.
“This will promote a competitive market for supply and distribution of ATF to the airport ‘on-site’ storage facilities,” it said.
Out of the 17.12 million tonnes of aviation turbine fuel (ATF) produced by public and private sector refineries, 8.2 million tonnes is consumed within the country and the rest is exported. Reliance’s twin refineries at Jamnagar produce close to 5 million tonnes of ATF, a large part of it is exported.
ATF demand in India is growing in double digits as more people fly. It rose by 11.8 per cent in the fiscal year ended March 31, 2024.
At Delhi International Airport, the country’s biggest hub of airlines, IOC and BPCL supply the bulk of the 2.7 million kilolitres per annum jet fuel requirement. This is because they not just own the pipeline but also storages outside the airport. Third parties have access to pipelines going into the airport but in absence of storage they can’t supply much.
Reliance
said it was “necessary to declare off-site ATF storage facilities at Bijwasan (outside the airport) as common user facility so that other suppliers or interested airlines can position ATF at the Bijwasan common user facility through rail wagons and use the common carrier pipeline from Bijwasan.”
For Mumbai, the second biggest hub, the firm wanted two
ATF pipelines
of HPCL and BPCL that bring fuel from the two refineries of the PSUs in the city, to be operated on a common carrier basis by giving other companies the right to use them.
For Bengaluru, which is home to the third largest airport in the country, Reliance wanted tie-in connection to the common carrier pipeline from the upcoming ATF tank farm at MRPL’s marketing terminal at Devangonthi as bringing products through tanker trucks to the airport fuel farm was not feasible in view of traffic woes.
While the pipeline supply to Hyderabad airport is operated on a common carrier open access basis, Reliance wanted the capacity of the pipeline to be increased to accommodate future demand and allow access to the storage tanks and rail wagon unloading facilities at Malkapur.
It made similar suggestions for Kochi and Lucknow airports.
“Pipelines are an efficient, economical and safe mode of bulk transportation from supply installations to demand centres and these measures (proposed by PNGRB) will promote competition, ensure compliance with environmental and safety statutes and avoid infructuous investments by optimum utilisation of product storage and pipeline infrastructure,” Reliance said.
Such competition, it said, will benefit airline companies, which incur one-third of their cost on fuel.
The Petroleum and Natural Gas Regulatory Board (PNGRB) had invited comments from the public and various stakeholders including oil marketing companies (OMCs), airport operators, and airlines operators for development of aviation turbine fuel (ATF) pipelines connecting various greenfield and brownfield existing and upcoming airports in India.
“Pipelines are the cheapest mode of transport of liquid fuels with road transport being quite costly. And looking at the high share of ATF price in airline costs, provision of the pipeline could bring down the cost of air travel,” the regulator had said in a notice inviting comments in February.
While the fuel market is open in the airport premises, in the absence of a common carrier pipeline the objective of this open market cannot be achieved.
“There are a few other ATF pipelines which are being operated by the OMCs, which also need to be declared as common/contract carriers,” the regulator had said. “This move will enable other OMCs to utilize these pipelines for transporting their products, fostering competitiveness within the industry”.
Comments on the proposal came in last week.
PSUs are open to declaring new pipelines as common carriers but resist the same for old ones which they built for meeting captive requirements.
