Birla not to exit from MRPL

HPCL and the AVB group have 37 per cent stake each in the nine million tonne refinery joint venture which has an asset value of about Rs 7,000 crore. A senior Birla official M C Bagrodia recently met Petroleum Minister Ram Naik and other senior officials listing out the differences with state owned HPCL.

Birla group officials said that the joint venture was suffering because it was not getting the marketing margin which were being pocketed totally by HPCL. "If MRPL was having the marketing right on its own it would not have been suffering losses," she said on condition of anonymity and added that HPCL and had not even signed a proper marketing agreement with MRPL.

When contacted, HPCL chairman and managing director H L Zutchi said he had not received an `written’ communication from the Birla group but assured that `MRPL will not be allowed to sink’.

When contacted, Petroleum Ministry officials said they also received a written communication from the A V Birla group to settle issues, including marketing margin, with HPCL.

In the absence of defined marketing arrangement, HPCL was not commiting to lift fixed quantity of petroleum products, MRPL officials said pointing out that the original refinery of three million tonnes capacity was shut down for last two months due to dearth of demand.

Asked about the refinery’s performance, MRPL’s Managing Director Ravi Kastia said: "We are now operating the expanded six million tonne refinery only. The original three million tonne capacity has been shut down temporarily."

MRPL incurred a loss of Rs 300 crore during the last fiscal followed by another Rs 167 crore during the first half of the current financial year, he said, but declined to comment on differences between the two promoters.

MRPL’s accounted for about 26 per cent of petroleum product marketed by HPCL during the last financial year and the share is likely to increase during the current fiscal with the name plate capacity of the refinery going up to nine million tonnes.

Company officials said that MRPL, working at about 70-80 per cent capacity against the high capacity utilisation of over 100 per cent by many other refineries, was nationally losing about Rs 500-550 crore in absence of marketing margins and marketing rights.

Officials pointed out that government had decided the fate of its stand-alone refineries by selling these to Indian Oil (IOC) and Bharat Petroleum (BPCL) as these would not be able to survive in the free market scenario from 2002. "The Government should also consider giving us marketing rights and persuade HPCL to go for appropriate marketing arrangement with MRPL," they said.

As of now the JV was marketing some of the deregulated petroleum products in its own, they said and added that it be allowed to market atleast 10-15 per cent of other products, which are under government control now, initially. "Therafter MRPL can increase its marketing operations," they said.