India: Independent Oil Companies Make Proposal to Resurrect Petrol Retail

The proposal would narrow the price differential between the products sold through private retailers and public sector retail outlets, but also help the PSU oil marketing companies (OMCs) to reduce their revenue losses.

Official sources informed local media that “the private players are raising this option for the Government to consider”. It is proposed that private retailers will buy petrol and diesel from PSU refiners at the current retail selling price of State-owned OMCs plus Re 1 a litre. The private retailer would then sell the two products at a minimum of Re 1 a litre over the PSU price, thus avoiding undercutting of PSUs’ volumes.

Independent oil companies Essar Oil  and Reliance Petroleum have been incurring losses on their retail businesses, which have been suspended due to the disparity in international crude prices and retail selling price and the absence of a level playing field. With this proposal, the private retailers expect that their sale volumes would stabilise after three-four months and this will also allow them to keep their networks active.

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