Reliance Industries Ltd (RIL) has formally requested access to the extensive network of pipelines and storage facilities built by public sector oil companies for the distribution of aviation turbine fuel (ATF).
This move aims to enhance Reliance’s market share in supplying jet fuel at some of Asia’s busiest airports. Currently, Reliance supplies a modest volume of ATF compared to the substantial quantities provided by state-owned firms.
In its response to the Petroleum and Natural Gas Regulatory Board’s (PNGRB) draft regulation, which proposes open access to ATF pipelines at all airports to foster competition and reduce costs, Reliance stressed the importance of including storage depots outside major airports. Specifically, the company seeks access to facilities near Delhi, Mumbai, Bengaluru, and Hyderabad airports. Despite the market being open, the supply infrastructure at key airports is predominantly controlled by state-owned Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL). These companies have developed pipelines and storage over decades, creating a significant competitive advantage.
Reliance, which produces approximately 25% of India’s ATF, argued that the scope of common carrier pipelines should extend to associated storage facilities and pumping stations at off-site terminals. This, they assert, is critical for ensuring a truly competitive market for ATF supply and distribution to on-site airport storage facilities. India’s ATF production, totalling 17.12 million tonnes annually, sees around 8.2 million tonnes consumed domestically, with the remainder exported. Reliance’s Jamnagar refineries alone produce close to 5 million tonnes of ATF, a significant portion of which is exported.
The demand for ATF in India is rising, with an 11.8% increase reported for the fiscal year ending March 31, 2024. At Delhi International Airport, the country’s largest aviation hub, IOC and BPCL meet most of the 2.7 million kilolitres annual demand, owing to their pipeline and storage assets. Reliance suggests that declaring off-site storage facilities, such as those at Bijwasan near Delhi, as common user facilities would allow other suppliers to use these infrastructures, thereby enhancing competition.
In Mumbai, India’s second-largest aviation hub, Reliance seeks access to two ATF pipelines operated by HPCL and BPCL. Similarly, for Bengaluru’s Kempegowda International Airport, the company proposes a tie-in connection to the common carrier pipeline from the upcoming ATF tank farm at Mangalore Refinery and Petrochemicals Ltd’s (MRPL) terminal at Devangonthi.
While Hyderabad’s Rajiv Gandhi International Airport already operates under a common carrier open access system, Reliance has called for an increase in pipeline capacity to meet future demand and access to storage and rail wagon unloading facilities at Malkapur. Reliance also made similar proposals for Kochi and Lucknow airports, highlighting the efficiency, economy, and safety of pipeline transportation over road transport. The company emphasised that such measures would not only promote competition but also ensure compliance with environmental and safety regulations while optimising the utilisation of existing infrastructure.
The PNGRB had earlier sought feedback from the public and stakeholders on developing ATF pipelines for both existing and new airports. The regulator noted that pipelines are the most cost-effective mode of liquid fuel transport and stressed that enhancing access to these pipelines could significantly reduce the cost of air travel by lowering ATF prices, which constitute a major expense for airlines. Reliance’s push for broader access to ATF pipelines and storage facilities underscores a strategic effort to level the playing field and foster a more competitive market landscape, ultimately benefiting the aviation industry and consumers alike.
