NEW DELHI: 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 today.
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 USD 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 LokSabha.
In a written reply to a question, he said that of the USD 477 million BP claimed to have invested in India, USD 259 million was said to a capital investment and another USD 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 USD 508 million between 2011-12 and 2013-14 of which the capital expenditure (capex) component and operational expenditure (opex) component is USD 171 million and USD 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 USD 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 Petroleum 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 over the next few years.
