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Competition in petrol retailing is being generated as the Indian
government established the Kirit Parikh committee to suggest reforms in
fuel pricing.
Essar Oil and Reliance are both expanding the rollout of their
outlets, after a long period of rollback and dormancy. Reliance has
re-opened 400 outlets. The company had around 1,450 fuel retail
outlets and in May 2008, RIL closed almost all its outlets, due
to mounting losses as it was selling fuel much above the subsidised
retail prices of state-owned oil companies. Essar Oil operates around
1,278 retail outlets and has around 2 per cent market share. The
company’s plans are to take the number of outlets to 1,500 by March
2010.
While Essar Oil is selling auto fuel at par with rates of public sector
companies that dominate the market, RIL is selling petrol at a Rs 2.50
premium to their prices at certain locations. The company, however, has
priced diesel at par with PSU firms. “Our mainstay is diesel. Our
outlets are mainly on the highways, so not many petrol users come to
us. Higher petrol pricing helps us keep losses away,” said an RIL
official.
State oil marketing companies are selling petrol at Rs 48.76 a litre
and diesel at Rs 36.70 a litre in Mumbai, and at Rs 32.87 a litre for
diesel and Rs 44.63 a litre for petrol in Delhi. Indian Oil Corporation
has over 18,000 fuel retail outlets. Bharat Petroleum Corporation has
over 10,000 and Hindustan Petroleum Corporation over 9,000.
“The private companies are banking on the Kirit Parikh committee report
to have a level playing field and increase their market share. Also, if
fuel prices are de-regulated, the proposed RIL and Indian Oil
Corporation joint venture to operate the former’s retail outlets may
not be needed,” said an industry expert on retailing.
The five-member Parikh panel was established last month and told to
give a report in three months. The expert group will examine the
current pricing policy of the four sensitive petroleum products —
petrol, diesel, PDS kerosene and domestic LPG, and make recommendations
for a viable and sustainable pricing policy for these products. Kirit
Parikh, who chairs it, is a former member (energy) of the Planning
Commission. Also on the panel are Isher Ahluwalia, head of the Indian
Council for Research into International Economic Relations, and Suman
Bery, head of the National Council of Applied Economic Research, beside
the secretaries of finance and petroleum ministries.
This is the third high-level panel to be reporting on the issue. The
earlier ones were chaired by C Rangarajan, currently chairman of the
Prime Minister’s Economic Advisory Council, and by B K Chaturvedi,
former Cabinet Secretary. Their reports have not been fully
implemented.
PetrolWorld 191009 Source : Local Media
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