Indian conglomerate Reliance Industries (RIL) has lodged an anti-competition complaint against state-owned jet fuel suppliers, as private-sector refiners try to break into the domestic aviation fuel market.
The complaint alleges that state-owned refiners IOC, Bharat Petroleum and Hindustan Petroleum worked together as a cartel to supply jet fuel to Air India. The national carrier buys jet fuel through regular tenders managed by its parent company Nacil. RIL claims state-owned refiners banded together to bid at prices below market levels, effectively shutting out private-sector suppliers.
State-owned refiners are known to vary their jet fuel tender prices depending on location. Prices have, on occasions, appeared to be lower at locations where RIL has a presence, industry participants noted.
A complaint was this week lodged with the Competition Commission of India (CCI), an autonomous body charged with promoting and sustaining market competition, a source familiar with the situation confirmed.
The commission will first decide if the complaint merits an investigation, the source said. If so, a special committee will be set up to look into the complaint. A possible outcome could see the offenders being fined or penalised in other ways. There is no fixed timeframe for such investigations, the source added.
RIL declined to comment on the complaint.
India's private-sector refiners RIL and Essar Oil currently export almost of their jet fuel production. State-owned refiners are dominant in the domestic market partly from their near-monopoly of storage and logistics at India's airports.
But a move towards privatisation has granted all refiners open access to all refuelling infrastructure at certain airports such as Bangalore, Hyderabad, and just this week, Delhi. An open access system is expected to be adopted at Mumbai and Kolkata and newly-built airports as well.
With the growing privatisation of Indian airports, private-sector refiners are keen to gain a foothold in the domestic jet fuel market. Despite the financial woes facing several Indian airlines, including Air India, domestic profit margins are thought to be still higher than in the export market. At least one Indian airline is thought to have been in talks with a private-sector refiner to import jet fuel directly. An anti-competition ruling in favour of RIL could further loosen the state-owned firms' grip and allow private-sector refiners to gain a bigger presence in the domestic market. India consumes nearly 100,000 b/d, industry participants said.
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