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IOC to continue naphtha supply to DPC

Despite snapping almost all its joint venture agreements with troubled American energy major Enron, state-owned Indian Oil Corporation will continue to supply 1.2 million tonnes of Naphtha to Dabhol Power Company even as formal agreement to this effect is yet to materialise.

"IOC has not curtailed its supply of naphtha to DPC's plant in Dabhol and we have already utlitised around 50,000 tonnes of the fuel since our informal agreement in Janaury last," a DPC official said on Monday.

The Fortune 500 company supplies naphtha at import parity prices almost the same level as that of DPC's former international fuel supplier Glencore, he said.

"IOC charges naphtha at a landed price of $290 per tonne, including 16-18 per cent premium," the official added.

However, both the companies were yet to sign a formal contract over the supply agreement as the state government has not shown its readiness to waive the over 5 per cent sales tax levied on procurement of naphtha from outside Maharashtra.

"Our pleas to the state finance ministry that it cannot levy a sales tax on this fuel as it was purchased at a domestic level has fallen on deaf ears," he said, adding that DPC was compelled to on-pass this charge to its consumer, the cash-strapped Maharashtra State Electricity Board.

The official said it was mainly due to this possibility of a sales tax waiver, that had hindered the signing of a formal agreement with IOC.

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