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Reliance Petroleum hones marketing strategy

India's largest private refiner Reliance Petroleum Ltd is putting together a multi-pronged strategy to market its products once the sector is opened to private firms in April 2002, its chairman said on Tuesday.

In the run up to deregulation, the firm, which operates a 27 million tonne refinery, will form joint ventures, acquire marketing assets as well as develop its own infrastructure, chairman Dhirubai Ambani said.

Backed by the formidable Reliance group -- the country's largest business group by sales -- RPL's entry into marketing is expected to shake up a sector dominated by state-run firms.

"RPL has already applied for marketing rights for controlled products from April 2002, as it meets all the government's criteria," Ambani said.

He was speaking to shareholders at the firm's annual general meeting at Jamnagar in Gujarat where the 540,000 barrels-per-day refinery is located.

The firm had already signed a memorandum of understanding with state-run refiner Indian Oil Corporation -- the country's largest firm by sales -- for a marketing joint venture, the chairman said.

In addition, it has bid for a stake in state-run marketer IBP Ltd, which the government plans to privatise, he added.

This showed the firm was serious about its marketing plans, Ambani told shareholders.

RPL on Tuesday also announced plans to increase its production capacity by getting rid of bottlenecks in its operations.

Until April next year, the private refiner must sell controlled products like liquefied natural gas, gasoline, kerosene and diesel -- for which the government sets prices -- only to state-run marketing companies.

A special government committee sets prices of these products, based on prevailing international prices.

Besides IOC, the other state-run marketing and refining firms are Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd.

PIPELINE INVESTMENTS

Underpinning RPL's marketing strategy is its proposed investment in pipelines.

This will allow distribution across India in a seamless and efficient manner, Ambani said.

RPL owns 10 per cent of Petronet India Ltd, a consortium owned mainly by state-run petroleum firms, which will construct pipelines for transporting petroleum products across India.

The private refiner also has 13 per cent equity in Petronet V K Ltd, which owns a 113 km-long pipeline from Vadinar, close to Jamnagar in western Gujarat to Kandla further north, one of the busiest ports in the country.

This pipeline also links to another pipeline, which runs to the high growth markets in the north and northwest.

Ambani also said RPL proposed to hold 26 per cent of a joint venture that is to implement the 1,615 km Central India Pipeline Project, linking the Jamnagar refinery to landlocked markets in central India.

To fund its various investments, RPL will shortly sign agreements for $250 million in term loans, in addition to the $500 million syndicated, foreign currency term loan it raised in May, the chairman said.

"This landmark transaction reflects RPL's inherent financial strengths and demonstrates the confidence of the international banking community in RPL's creditworthiness," Ambani said.

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