1. Pricing reforms for the Petroleum Sector 26 th July 2006 Industries Limited RIL’s Existing Refinery At Jamnagar, Gujarat

2. www.ril.com 2 Petroleum Pricing – Intent vs Reality GoI Policy Market Determined Pricing for MS & HSD Subsidy only for LPG & SKO Transparent subsidies Level Playing Field for all Players Ground Realities GoI control on the Prices Subsidy on MS & HSD in additional to SKO & LPG Complex and opaque subsidies Subsidies available only to PSUs killing Competition Driving Private Sector out of Petroleum Marketing

3. www.ril.com 3 Non Level Playing Ground ? Private Companies are left with an Under Recovery of Rs 3.39 / Litre on MS and Rs 5.77 / Litre on HSD

4. www.ril.com 4 Under Recovery : Our Estimates More Government Support UNAVOIDABLE

5. www.ril.com 5 Co-existence taxes & non transparent subsidies Co-existence of taxes and non-transparent subsidies – Lowering of taxes or, alternatively issue of oil bonds to all players in proportion to domestic sales.

6. www.ril.com 6 Reduction in Excise Duty Alternative to Additional Bonds is Reducing Duty

7. www.ril.com 7 Can we reduce Sales tax as well ?  Uniform Sales Tax / VAT in States eliminates cross border distortions

8. www.ril.com 8 To Conclude….For Oil Industry to Survive Energy is critical and needs critical corrective steps for a sustainable future For a robust Oil Industry avoid opaque and partisan subsidies by:  Reducing Excise Duty on MS and HSD  Levying Specific duty on MS and HSD  Reducing the Sales Tax levels  Introducing uniform levels of sales tax/VAT on petroleum products in all states

9. Q&A Thank You

10. www.ril.com 10 Options for a Private Company RSP was increased to maintain a differential of Rs 2.50 per Litre in both MS and HSD Market Share dropped to <2% from 15% Company Investment of 4000 Crores and Dealer Investment between 1.5 - 2 Crores per RO : Idling Transporter (3745 Trucks) Investment of Rs 524 Crores Idling 55,000 Jobs at Risk Competition will die Consumer expectation on world class Q & Q will die a premature death Continue Marketing & Continue Absorbing Losses Reduce Volume Increase Prices OR