Fearing closure of petrol pumps, RIL-BP drafting a rescue plan: Report

Earlier in 2008, RIL had compensated dealers when it shut retail outlets due to high crude oil prices and lack of support from the government

Reliance Industries Ltd (RIL) and BP Plc, which operate more than 1,400 fuel retail outlets under the Jio-BP brand, are drawing up a compensation plan for dealers, according to a report in the Economic Times.

Reliance nearly halved fuel supply to its dealers on March 16 owing to losses of Rs 10-12 per litre daily on the sale of diesel. RIL has not resumed fuel supplies to the full extent, says the report.

According to the report, a dealer from Bihar said that RIL is considering some options to avoid the closure of retail outlets. The company may extend financial support or pay for overhead expenses, or even alter fuel supply.

In 2008, RIL had compensated dealers when it shut retail outlets due to high crude oil prices and lack of support from the government. Reliance had offered to give Rs 500 per kilolitre additional margin on diesel and Rs 400 per kilolitre additional margin on petrol for the outlets that opted to continue operations. Outlets that decided to discontinue fuel sales were given a 12.5 per cent return on the capital employed by them in setting up the outlet. 

Another dealer from Gujarat said that the company officials approached them and informed that a compensation plan was in draft stage. Despite not getting fuel supply and the pump running dry, the dealer said that if the compensation plan does work out, it would be great support.

Oil marketing companies' officials said they are incurring a loss of up to Rs 10 per litre on petrol and Rs 20 per litre on diesel.

Petrol and diesel prices were hiked 14 times from March 22 to April 6 but there has been no increase after that.