RIL may reopen retail outlets today
16 Mar 2009
After keeping its petrol pumps shut for nearly a year, India's largest refiner, Reliance Industries Ltd (RIL), is all set to restart its fuel retailing business today. Moneycontrol reports that it will buy auto fuel from Indian Oil Corporation (IOC) and Essar Oil.
The retail fuel operations will start initially in Gujarat and Maharashtra. RIL may later form a joint venture with IOC to run these outlets. However, a Reliance spokesperson has said no official decision has been taken and that the company is considering all available options.
Earlier, there were reports that IOC and RIL are in discussions to form a joint venture for leasing out retail outlets. The two companies may go for re-branding of the outlets. RIL has approached other refiners, including Hindustan Petroleum and MRPL for buying products from them.
Sources said the JV route is being evaluated in order to get subsidy benefit from the government, which at present is available only to the three public sector oil undertakings.
The Mukesh Ambani-controlled company shut all its petrol pumps a year ago after sales dropped to almost nil, as it could not match the subsidised prices offered by the PSUs. With crude oil prices at $149 a barrel in June 2008, the losses Reliance sustained from fuel retail had become unmanageable.
''We are talking to all companies for sourcing of products,'' PMS Prasad, head of Reliance's petroleum business is reported to have told a newspaper. ''Some preparatory work has also been done at the retail outlets, but we have not taken any decision on starting our pumps full steam.''
Ironically, even after becoming the country's largest maker of petroleum products, Reliance will have to source petrol and diesel for retail from other refiners. This is because both its refineries at Jamnagar in Gujarat are licenced only for exports. RIL cannot sell that fuel within India.
The 'export-oriented unit' status of one of its refineries will end in March next year, after which it will be able to sell the product domestically. The refinery, Jamnagar-1, has a capacity of 660,000 barrels per day. However, if it should choose to sell in the domestic market, it would attract double excise and customs duties, making the fuel costlier by Rs 9-10 a litre.