Reliance Industries has got the government approval for converting its existing 33 million tpa refinery in Jamnagar into an export oriented unit (EOU).

The company will be entitled to export its entire products to overseas markets and will also enjoy an income tax holiday till March 2009 and duty free import of crude oil.

Besides, with EOU status, Reliance will be able to import crude oil duty free. The company imports around 216 million barrels of crude oil per annum. At $60 a barrel, the company will have to pay $12,960 million annually for importing crude oil. RIL will save approximately $650 million per annum as it will not have to pay 5 percent duty on crude oil. While the company can import crude oil duty free to the extent of its exports, the EOU status will improve its cash flow position.

Even as the company plans to export most of its products overseas, it is lobbying with the petroleum ministry to allow it to source petroleum products from PSU oil companies for domestic sales.

RIL may also export kerosene and LPG under this scheme, but it needs to obtain specific permission from the petroleum ministry. It is learnt that RIL is planning to cut production of LPG at its Jamnagar refinery by almost 1 million tpa as the government does not allow LPG to be exported as the country is not self-sufficient in LPG production.

Also See:

Jamnagar Petroleum Refinery: A Status Report (12-Jan-07)