Reliance pleads for level playing field in oil retail
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Reliance pleads for level playing field in oil retail

Reliance Industries is close to being forced out of oil retailing due to heavy losses on account of Govt policies.

india Updated: Aug 25, 2006 19:10 IST

Reliance Industries Ltd, which is on the verge of being forced out of fuel retailing business due to heavy losses, has asked the Government to provide a level playing field to private and public sector firms and evolve a transparent system of pricing.

RIL, the largest private fuel retailer with over 1,250 petrol stations, was losing Rs 3.37 per litre on petrol and Rs 5.77 a litre on diesel despite pricing the auto fuels about Rs 2.50 a litre higher than the price charged by PSU firms, company Vice President (Petroleum Business) Ashok Dhar said.

He said RIL was being denied a level playing field by the policy of compensating its PSU competition for the losses on fuel sale through a combination of discounts from upstream companies like ONGC and issue of oil bonds.

"When we were issued license to market petrol and diesel in March of 2002, we were promised market determined pricing. But when the Government keeps prices artificially lower at 95 per cent of the outlets, there is no question of competition (from private sector) surviving," he said.

At that time it was promised that PSUs would be compensated only for under-pricing LPG and kerosene but today they are being subsidized even for petrol and diesel, he said.

Reliance demanded that the Government should subsidise consumers rather than product and shift to specific duty regime instead of current ad-volarem structure where the tax component increases with every increase in price. It should target One India-One Market-One Rate of Tax and treat PSUs and private players on par for oil subsidy to create a level playing field.

Dhar countered the contention that private firms were free to raise prices saying that the freedom to increase prices is not a solution to the problem in a commodity market where the Government subsidises selectively, as it would tantmount to closing down of businesses of those who are not subsidised irrespective of whether they choose to exercise the freedom or not.

"By denying just compensation to us, the Government has eliminated competition to PSU oil marketing companies," he said.

Reliance, which has more than 1,250 petrol pumps on ground and another 900 awaiting commissioning, lost 12 per cent market share in diesel sales after it priced its product higher than the PSU.

"The role of the Government is to ensure level playing field especially in terms of uniform pricing policies for all the players, both private and PSU, in refining and marketing operations so that consumers are benefited from open, transparent competition," he said.

First Published: Aug 25, 2006 19:10 IST