RIL to exit fuel retail
The country’s largest private sector company RIL, which has invested Rs 5,000 crore in setting up 1,432 petrol pumps, had shut all its petrol pumps a year back, reports Anupama Airy.business Updated: Mar 18, 2009 21:04 IST
The country’s largest private sector company Reliance Industries Ltd is preparing to exit its fuel retailing business. The company, which has invested Rs 5,000 crore in setting up 1,432 petrol pumps, had shut all its petrol pumps a year back.
The company has floated a ‘confidential information memorandum’ to a select oil firms including Indian Oil Corp (IOC), Hindustan Petroleum Corp Ltd (HPCL), Bharat Petroleum Corp Ltd and Shell India Ltd.
One of the options listed under the memorandum is to seek an expression of interest for completely selling out its petrol pumps. The last date for submitting an Expression of Interest (EOI) is March 20, 2009.
The second option is to enter into a joint venture arrangement for operating these pumps and to market fuel through a co-branding route.
IOC and Royal Dutch Shell are the two companies in the fray for acquiring the petrol pumps of Reliance. While Vikram Mehta, chairman, Shell India did not wish to comment, HPCL and BPCL executives said they are not interested in the deal.
A senior IOC official confirmed that the company is in the process of submitting a “non-binding bid” for buying out the fuel stations of Reliance.
The official also said that IOC, which has 17,600 existing petrol pumps, will carry out a detailed due-diligence exercise of Reliance’s petrol pumps and get the assets valued.
A member of the IOC board confirmed the move, but said it was premature to comment. “A final decision will be taken only after proper due-diligence and valuation of Reliance fuel retailing stations.”
However, a Reliance spokesperson said: “We have no plans of exiting our fuel retail business. We are exploring options collaborating with other players in the market."
Till such time Reliance finds a suitable buyer for its petrol pumps, it plans to resume sales from its petrol pumps in phases by sourcing fuels from private refineries — Essar Oil and Mangalore Refineries and Petrochemicals Ltd, a subsidiary of ONGC. Both MRPL and Essar Oil officials confirmed having been approached by Reliance for a product supply agreement.
Reliance is the country’s largest producer of petroleum products with two “only-for-exports” refineries at Jamnagar in Gujarat. The capacity of the two refineries is 64 million tonnes per annum (tpa) or 36 per cent of India’s total refining capacity.
The company is pushing for direct sales of petroleum products like petrol and diesel in overseas markets, especially the US — the world's largest oil consumer.