India: Reliance Sees State Oil Companies as Solution For Network (Update)

Sources say that RIL has sent formal letters to all the oil marketing companies Indian Oil, HPCL and BPCL for some sort of tie up or joint venture (JV) over their petrol stations. The nature of these joints ventures are not yet known but experts say RIL could look at some sort of arrangement where they would lease out their properties to oil marketing companies or enter into a product supply arrangement at break even prices. This way RIL would get lease rentals from these prime properties.

Reliance Industries has 1400 petrol pumps all over the country and has closed them all when crude oil prices hit the roof and business became unviable because oil marketing companies were still selling fuel at a subsidy. Companies like Essar Oil had started opening their outlets when crude oil prices had started dipping but Reliance officials had always maintained that they would open their petrol pumps only when they get some sort of assurance from the government either over free market pricing or on subsidy.

In the last AGM the Chairman of the company, Mukesh Ambani said that they would not be exiting this business. Industry experts said JV is the only way forward for RIL to make some upside over their closed petrol stations.

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5th March 09  India: RIL Sees HPCL as Option for Petrol Retail Deal