Private sector oil companies have renewed their demand to have access to Mumbai airport and supply aviation turbine fuel (ATF) to airline customers.
Currently, the entire ATF demand of 1.4 MMTPA (million metric tonnes per annum) at the Mumbai airport is solely met by public sector oil companies — IOCL, BPCL and HPCL — through two pipelines originating from the two refineries belonging to BPCL and HPCL in Mumbai.
IOCL had entered into an arrangement with BPCL, HPCL and a joint venture company called Mumbai Aviation Fuel Farm Facility Pvt. Ltd (MAFFFL) to supply ATF at the airport, where airlines consume more than a fifth of the total fuel requirement of the country.
Private oil companies insist that in the absence of competition, airlines do not enjoy the benefit of competitive prices at Mumbai as has been the case at other airports where Reliance or other private players are present. To allow access to all ATF suppliers on a non-discriminatory basis, MAFFFL was incorporated by Mumbai International Airport Pvt. Ltd. (MIAL), the operator of the airport, for developing the integrated fuel farm facility (IFFF) at the airport.
But private sector oil companies claim that MAFFFL is being controlled by the public sector oil companies which are creating resistance to allow private players to enter the airport. An email seeking response from the PSU firms remained unanswered.
Work under progress
Though the Competition Commission of India (CCI) had granted approval for IFFF to be set up by MAFFFL, the construction work was still under progress. “IFFF and the infrastructure could be used by any of the ATF suppliers, in an open access and arm’s length basis, upon payment of a regulated common fee,” said a private sector oil company executive on the condition of anonymity.
“But open access is incomplete without ATF suppliers getting access to the main mode of supply pipelines on equal footing,” said the executive.
“Currently, these two pipelines are being operated much below the design capacity and spare capacity is not being shared with other eligible ATF suppliers. Given this underutilised pipeline capacity, creation of any third pipeline would only be an infructuous investment,” the executive said.
“Using the surplus capacity available in the existing pipeline would bring reduction in the infrastructure charges to be paid by the ATF suppliers,” he added. “Access to these two pipelines by declaring them as a “common carrier” would allow optimum utilisation of the infrastructure of petroleum and petroleum products and avoidance of infructuous investments,” the executive said.
“This will promote competition and will be in the best interest of consumer interest. Such declaration would immensely benefit the public at large in terms of cost, efficient and speedy air travel,” he added.
A Reliance spokesperson declined to comment.
A spokesperson for Nayara Energy, formerly Essar Oil, said: “We are watching this space keenly and are bullish on ATF marketing prospects in India. The government’s focus to substantially increase the airport footprints and allow healthy competition amongst airlines will add a lot of impetus to the sector. We welcome these initiatives and are committed towards developing mutually beneficial long term partnerships across this ATF ecosystem, and also support initiatives around common carrier principle with respect to product transportation and access.”