India: Reliance Petroleum to Reopen Petrol Station Network

Reliance closed down its petrol retail network operations earlier this year in the wake of spiralling crude oil prices.  Now it appears to be a time of reviewing the situaiton especially with the government moving to a domestic price cut.  Reliance closed over 1,400 petroleum retail outlets across the country on March 15, 2008, owing to the differential between the company’s prices and the subsidised prices offered by the public sector oil firms.

We are not aware of any move to offer a level playing field for us to review our decision.” According to sources, crude oil prices have come down to $65 a barrel from a record of $147 a barrel in July. “A marginal reduction of prices by the state-owned oil marketing companies will make RIL’s retail business viable,” said an industry source.

Reliance Jamnagar refinery is an export-oriented unit  which will face double taxation if it sells fuel in India. Reliance has to either outsource fuel or import fuel to sell it at its own outlets. Reliance has asked the government to allow it to sell diesel to the state-owned oil marketing companies as deemed exports. If it is granted, Reliance would not only be exempted from paying additional taxes but also its sales in domestic tariff area would be counted against its net foreign exchange earning liability.

The move also follows Essar recent reopening of 360 petrol stations which had been closed. Essar is planning to double its retail network by the end of November, 1,000 by December and 1,250 by January 2009.

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