Essar Oil - RIL in mutual fuel distribution pact

20 December 2006

Old rivals Essar Oil and Reliance Industries have joined hands to distribute each others' products, reports CNBC-TV18.

They used to be seen as among the biggest rivals in corporate India. But time and markets seem to have mended fences. The two companies will join hands to take forward their fuel businesses throughout India. The co-operation makes sense.

"In the market place, you compete. But when it comes to infrastructure sharing, cutting down your logistics cost, your infrastructure cost, production cost, you cooperate. This is the phenomena world over. We and Reliance are also going to do just that," said A N Sinha, MD, Essar Oil.

Essar Oil's Vadinar refinery began operations on November 24 this year, exporting 35,000 tons of vacuum gas oil to British Petroleum. Essar wants to boost its initial capacity of 7.5-million tonnes to 10.5 million by the end of March. Even though it will be a while before retail petrol pumps get its fuel, Essar Oil hopes to make operational profits next fiscal year.

Having commissioned this refinery after a struggle of over a decade, Essar hopes prevailing global prices and its strategy of co-operating with its one-time corporate rival Reliance would have it turn around corner faster than it imagined.