IOC opposes move to declare its pipeline as common carrier

New Delhi: State-run IOC has opposed oil regulator PNGRB's move to declare 20 of its petroleum product pipelines as common carrier to allow third party access for transportation of fuel, saying the move will hamper refinery industry and may lead to supply issues.

The Petroleum and Natural Gas Regulatory Board (PNGRB) last month issued a notice to the declared 20 pipelines of IOC, accounting for close of half of the company's pipeline capacity of 80 million tons, as common carrier by reserving some portion of lines for use by third parties.

The move would allow private firms like Essar Oil and Reliance Industries to get rights to move products on the 5,900-km network. The 20 pipelines have a combined capacity to move 38.59 million tons of products annually.

Strongly opposing the move, IOC in its comments on the proposal said all of the 20 pipelines are for captive use.

"IOC's pipelines are not being used for supply of petroleum and petroleum products to any consumer," it said adding all of them are dedicated pipelines being used for captive purpose.

The pipelines, it said, originate from IOC's refineries and terminate at the company's depots. "These pipelines merely serve as a mode of evacuation and of stock transfer."

IOC said petroleum product pipelines are not natural monopolies as alternative modes of transport (rail/road) are available.

"It is not a case of natural gas pipelines where there is a natural monopoly as natural gas cannot be transported on land by any other modes.

"Hence the basic criterion for bringing in competition for petroleum product pipelines is totally different, and as per that market dynamics, competition already exists in the market. Further IOC's pipelines since inception are intended and being used for captive purpose," the company said.

IOC said its pipelines are not 'common carrier' under provision of the PNGRB Act of 2006 and the regulator's authority in respect of those pipelines which are not covered within the definition of common carrier is limited.

"IOC's pipelines are for captive use and as such dedicated pipelines under the 2006 Act. Without such dedicated pipeline, no refinery can be conceptualised and implemented on economic viability.

"If the pipelines are not treated as dedicated pipeline, then the entire refinery industry will be hampered adversely, leading to non-fulfilment of public requirement," it said.

IOC argued that a pipeline can de declared a 'common carrier' only when there is more than one consumer. It says its pipelines cater exclusively to its own logistic requirements.

Among the pipelines PNGRB had sought to be declared as common carrier include Barauni-Kanpur, Koyali-Ahmedabad, Mathura-Delhi, Panipat-Ambala-Jalandhar, Chennai-Bangalore, Haldia-Barauni and Guwahati-Siliguri.