Fuel for three months

13 years, 9 months ago - 18 January 2011

“That three months of supply of fuel available in Mauritius until India and Iran reach a consensus on the method of payment for imports of heavy oil.” This was spoken by Minister of Industry and Commerce Showkutally Soodhun during a press-conference on Friday afternoon, and he added that cargo is currently loading position in India, while a new cargo comes from be delivered.

The minister said that there is the three-year contract signed between the government and Mangalore Refinery and Petrochemicals Ltd (MRPL) to disprove the argument that Mauritius would end up running out of fuel by the end of March. He argues there is no question to elaborate on other options because the India refinery has a legal duty to our country.

“I got a verbal guarantee from the Director of MRPL, Sudhir Vasudeva, you have nothing to worry about the supply of fuel. Indian Minister of Petroleum and Natural Gas Murli Deora has also given me that assurance,” said Showkutally Soodhun.

According to the Press Trust of India, supplying the Mauritius with fuel, including gasoline, diesel and Jet A-1, may be compromised due to a sudden and unilateral decision the Reserve Bank of India to ban transfer funds to Iran through the Asian Clearing Fund (ACF). Thus, this revision of the payment protocol has fuelled the ire of Iranian authorities who immediately announced the suspension of import of crude to Great Peninsula.

“Non availability of Iranian crude oil would result in supply disruption to Mauritius, and the entire Mauritius may come to standstill As they operate with a very low level of inventory, a source quoted MRPL's letter to Reserve Bank of India (RBI)” Indian media reported.

Following this publication, the minister made moves for clarification from more relevant authorities. “I immediately contacted the MRPL for clarification on this unexpected situation. I also spoke with Prime Minister Navin Ramgoolam before coming into contact with my counterpart Murli Deora. So nothing has been left to chance, and we responded with some quickness to put the record straight,” he advised.

According to latest information, India and Iran have begun a dialogue with the aim of reaching an agreement. However, today's value, Iran is not willing to reverse its decision. Moreover, the Eurasia Review (News & Analysis) headlined “The Oil Payments: New Twist in India-Iran Relations”, given the tension prevailing between the two countries.

Anyway, the minister of Industry and Commerce held to be reassuring. “We have nothing to fear," he said again and again. He focussed on the three-year contract signed between Mauritius and MRPL at a fixed premium. "If we ever find ourselves compelled to look to other countries to supply fuel at a higher price than that established by the MRPL is the refinery in India will have to pay additional costs to honour its commitments, written in black and white on paper. We have studied thoroughly the legal aspects before preparing the contract. We're finally here with hedging is in the public interest”

The minister also believes that the government absolutely must revise upward its stockpile of fuel to avoid being in a delicate situation in the future. “We have no choice but to review our storage - probably a stock of 25,000 tonnes - to be free of situations that arise at the impromptu” said he.