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R.S. Sharma, chairman and managing director of ONGC has stated they would stop plans to
build over 1,650 petrol stations despite the government's 10 percent
fuel price rise.
"Sensing a scenario of high
under-recoveries and selling at a loss we have decided to put this
retail business on the backburner," he said, referring to ONGC's plans
to build 1,100 retail stations nationwide along with 500 planned by
MRPL.
ONGC,
which owns the Mangalore Refinery and Petrochemicals Ltd, is the latest
firm to get cold feet on India's retail oil sector, where fuel prices
are kept artificially low and subsidies paid only to state-owned
marketing firms.
Privately owned giant Reliance Industries, which
operates India's biggest oil refinery, shut down hundreds of stations
in March, diverting most of its production to the export market where
it can benefit from global prices.
The government's recent fuel
price increase threw a lifeline to ailing refiners, but was far short
of fully compensating for losses caused by buying costly crude to
produce domestic gasoline, diesel and kerosene.
Despite the
burden, however, Sharma said eliminating subsidies was not the answer.
"Now
governments are in a dilemma. In case they pass on the burden (of high
oil prices) to the consumers, the economic wheel will come to a
standstill. The consumer cannot afford to pay those prices," Sharma
said, describing last week's run up in global crude prices to records
near $140 as worrisome.
Despite increasing difficulties in finding new oil, Sharma was upbeat about the company's overseas E&P prospects.
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