By Nidhi Verma
NEW DELHI, March 30 (Reuters) - India has rejected a requestfrom BP Plc to be allowed to sell jet fuel to the boomingaviation market in Asia's No. 3 economy, saying it did not meetthe conditions necessary, a source with direct knowledge of thedecision told Reuters.
Consumption of aviation fuel is set to rise in India asdomestic air traffic is estimated to almost triple this decade,with more of the country's 1.25 billion people starting to flyand as airlines connect smaller cities.
Demand for aviation fuel in India could rise by 2.2 percentin the financial year beginning in April, according to thePetroleum Planning and Analysis Cell in the federal oilministry.
BP is not the only overseas company interested in India'sjet fuel retail business, which is dominated by state refiners.Royal Dutch Shell Plc already sells a small volume ofjet fuel in a tie-up with state-run Mangalore Refinery andPetrochemicals Ltd.
The source declined to cite the precise reason for BP'srequest being turned down by the oil ministry.
According to Indian rules, marketing rights for jet fuel canbe given only to companies investing or proposing to invest atleast 20 billion rupees ($319 million) in exploration andproduction, refining, pipelines or terminals in the country.
In 2011 BP agreed to buy a 30 percent stake in oil and gasblocks operated by India's Reliance Industries for $7billion and also invested funds for further exploration anddevelopment.
It applied for a jet fuel marketing licence for the secondtime last year.
However, according to the source, who did not wish to beidentified, the oil ministry wrote to the company this monthsaying it did not meet the conditions specified for marketing aviation fuel in the country.
"BP has been continuously engaging with the Ministry ofPetroleum and Natural Gas regarding the licensing applicationand we are confident we meet the requirements," a spokeswomansaid in an email.
"We will continue to work closely with the Governmentauthorities and urge them to review the decision."
$1 = 62.6300 Indian rupees) (Editing by Alan Raybould)