New Delhi: Reliance Industries, India’s largest private sector oil firm, plans to shut down all its 1,400 petrol pumps by April-end as it is unable to match the fuel price offered by state-run retailers, who get compensated by the Government for selling fuel below the cost.
Reliance has sent internal mails to its petrol pump operators about the phased closure, industry sources said. The company plans not to replenish petrol and diesel stocks once the existing lot at its retail outlets get exhausted.
The owner of nation’s largest refinery suffered huge losses despite selling petrol and diesel at prices higher than the state-run retailers Indian Oil, Hindustan Petroleum and Bharat Petroleum. On an average, petrol from Reliance outlets costed between Rs4 and Rs5 a litre more than the PSU pumps.
Reliance still lost Rs3.4 a litre on petrol and Rs5.8 per litre on diesel and had seen its market share fall from 14.3% to less than 1% in diesel.
Public sector retailers too lose Rs9.68 on sale of every litre of petrol and Rs12.21 per litre on diesel but the losses are made up by issue of oil bonds by the Government and discounts from ONGC, Gail and Oil India. The same compensation is not given to the private retailers like Reliance and Essar.
Reliance spokesperson was not immediately available for comments.
The company, sources said, had invested about Rs4,000 crore in setting up close to 1,400 retail outlets for selling petrol and diesel in the country. Out of these, Reliance owns and operate about 450 outlets.
Besides, transporters had invested over Rs524 crore in a transport fleet of nearly 3,745 trucks, who after the closure would be idle.
Over 55,000 jobs which had been created by Reliance retail operations at outlets, transporters and within the company are now at risk.
Sources said the shift of huge volumes from Reliance outlets to PSU outlets would increase the burden of support on the Government to the tune of nearly Rs4,000 crore.