The government has rejected BP’s application for selling ATF, saying its expenditure in India so far does not qualify it to get a fuel retailing licence, but has allowed it to apply afresh with more details.
The Petroleum Ministry, earlier this month, wrote to Europe’s second-largest oil company, saying its $477 million investment in India till date does not qualify it to begin selling jet fuel to airlines, a senior Oil Ministry official said.
A licence to retail any of the transport fuels — petrol, diesel or aviation turbine fuel (ATF) — is contingent upon a company investing or proposing to invest Rs.2,000 crore in oil and gas exploration and production (E&P), refining, pipelines or terminals within ten years.
The official said BP’s $477 million investment since entering in 2011 included both capital and operating expenditure, mostly in its partner Reliance Industries’ offshore blocks, including the flagging KG-D6 in Krishna Godavari basin.
To qualify for a fuel retailing licence, an entity should have made capital investment of Rs.2,000 crore or $500 million, in line with the 2002 fuel retailing guidelines.
BP’s $7.2 billion spending in buying 30 per cent stake in 21 exploration blocks of RIL was not being considered as capital investment, he said.
He added that the letter clearly stated that BP could make fresh application detailing future investments to qualify for an ATF licence.
When contacted, BP spokesperson said, “BP 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.”
The company had, in January 2014, made the second application to start operations of Air BP, its aviation arm that sells ATF to airlines at airports.
It is keen to enter the booming aviation market in Asia’s third-largest economy. Jet fuel demand is expected to rise by 3-4 per cent annually over the next few years.