Diesel sales at RIL outlets close to nil

The government control over the price of diesel sold by its companies has rendered over three-fourth of Reliance Industries’ retail outlets non-operational according to a company executive. RIL, which had over 1,470 retail outlets, is said to be running only 350 of those at present.

An e-mail sent to RIL spokesperson remained unanswered. “Diesel sale at the outlets is close to nil and petrol is priced Rs 1 higher than public sector companies. Over 175 retail outlets that sell Auto LPG continue sales,” said the executive. In Delhi, petrol at the public sector retail outlets costs Rs 66.84 per litre and in Mumbai it is Rs 71.92 per litre.

Another RIL executive confirmed the development saying till diesel is de-regulated, it is not viable to operate the retail outlets.

Diesel at public sector retail outlets in Delhi is Rs 40.91 per litre and in Mumbai is Rs 45.99.

Analysts said they do not see RIL re-opening its fuel outlets in the near future. “For private fuel retailers, most of the product portfolio consists of diesel where the volumes come from. Until and unless diesel deregulation happens RIL’s fuel retail plans will not pick up,” said a Mumbai-based analyst tracking the company.

Oil minister S Jaipal Reddy recently ruled out either dual pricing or deregulation of diesel on the ground of practical and economic difficulties.

“I cannot de-dieselise the economy. Farmers use it, railways depend on it, our surface transport — both freight and RTCs (road transport corporations) run on it,” Reddy had said.The basket of crude oil that India buys had averaged $85.09 per barrel in 2010-11. From April-September, it has averaged $111.64 per barrel, a 31 per cent increase over the last financial year (2010-11).

Hardening of petroleum product prices in the international market and depreciation of rupee has lead to an increase in the under-recoveries of oil marketing companies during 2011-12.

PSU retailers hiked petrol price by Rs 3 per litre last month but they lose Rs 6.61 on every litre of diesel, Rs 24.63 on kerosene and Rs 270 on a domestic LPG cylinder.

Last month, Shell India closed 20 of its 81 retail outlets. Shell, the Indian arm of Royal Dutch Shell Plc, is the only foreign operator present in the domestic fuel retail business.

Essar Oil, on the other hand, is said to be operating its 1,385 retail outlets by selling petrol at PSU rates. Diesel, however, is sold at a differential of Rs 6.

Earlier the company, in an emailed response, had said given the current pricing scenario, the pace of further retail outlets expansion will be slower until diesel is deregulated. Essar Oil was planning to achieve a figure of 1,700 retail outlets by March 2011.

Private sector fuel retailers, Essar Oil, Reliance Industries and Shell, do not have a level-playing field as compared to state-run companies — IndianOil, Bharat Petroleum and Hindustan Petroleum.

India deregulated petrol price last June. The price of diesel, however, is still regulated due to which private retailers end up incurring losses. The government companies are compensated.

The government-owned companies dominate the fuel retail business, with over 90 per cent share.