Indian Oil Corporation (IOC), one of the potential suitors for the fuel retail business of Reliance Industries Ltd, is unlikely to go ahead and submit a financial bid.
A petroleum ministry official told Hindustan Times on condition of anonymity that IOC has been asked not to go ahead with any such tie-up with Reliance until a clear picture emerges on the policy for pricing fuels in India.
Fuel pricing in India is currently under government control and companies retailing fuel do not enjoy the freedom to fix fuel prices in line with international prices. As a result, in times of high global crude oil prices, fuel retailers in India have to incur heavy losses.
While PSU oil retailers are compensated for their losses by the government, there is no such mechanism for private fuel retailers. The petroleum ministry has mooted a proposal to free petrol and diesel prices in India.
Asked if IOC was out of the race, a senior company official declined to give an official comment. However, he confirmed that the petroleum ministry representatives on IOC’s board did express their reservations on IOC’s tie-up with Reliance at the company’s board meeting held recently in March.
“IOC’s initial expression of interest is non-binding and does not involve any financial commitment,” said the IOC official.
IOC Chairman and Managing Director Sarthak Behura refused to comment.