The finance ministry has turned down Myanmar government's proposal for importing 1.2 million tonnes of high-speed diesel against rupee payment.

The ministry said India had rupee trade only with Nepal and Bhutan and that it could not enter into such an arrangement with any other country.

The details of the Myanmar proposal and how it plans to earn the rupee to pay for the diesel are not known.

The Myanmar government had proposed to import the diesel from Numaligarh Refinery Ltd for consumption in its north-west region adjoining Nagaland.

The petroleum ministry was also in favour of the export since the north-eastern refineries are producing surplus products, which have to be evacuated to other parts of the country.

However, besides the rupee trade issue, the move has been facing difficulties on the price front, since the Numaligarh Refinery is finding it difficult to match the price at which Myanmar is getting the product from Thailand. Myanmar imports high-speed diesel from Thailand via its port town of Yangon from where it is sent to Tamu through waterways.

According to official sources, the cost of the product at Tamu comes to around $300 a tonne. However, if diesel is exported to Tamu from the Numaligarh Refinery via Manipur, the cost will come to around $306 a tonne.

"Under these circumstances, it is more economical to sell it in West Bengal rather than export it to Myanmar," an official said.

Since the Numaligarh Refinery would not get 50 per cent excise concession on the export of its products, the petroleum ministry has suggested that this rebate should be given to the refinery in the form of transport subsidy.

In case the finance ministry agrees to the proposal, the refinery will not only cover its cost of production, but may also earn a marginal profit.

As against the availability of around 4.6 million tonnes per annum (mmtpa) of products from 5.1 mmtpa of indigenous crude, the requirement of petroleum products in the Northeast is around 1.7 mmtpa.

The balance of around 2.9 mmtpa has to be moved out of Northeast refineries so that the refineries are able to absorb the entire crude production from the region.