The Comptroller and Auditor General of India (CAG) has asked the government to renegotiate the rate at which diesel is being bought from private refiners after discovering ‘undue benefit’ of Rs 667 crores to Essar Oil and Reliance Industries.
Public sector oil companies buy diesel at trade parity price (TPP) from private refiners to meet the demand shortfall. The TPP has two components - import parity price or actual import cost (80 per cent) and export parity or actual export price (20 per cent).
The CAG said private refiners export petroleum products at prices lower than TPP or IPP, which led to “undue benefit to private refiners (RIL and Essar Oil), which was estimated at Rs 667 crore on diesel in only one year ie 2011-12.’’
The same principal of buying fuel from standalone PSU refineries led to Mangalore Refinery (MRPL) gaining Rs 601 crores, Chennai Petroleum Rs 500 crores and Numaligarh Refineries Rs 327 crores.
