Essar to quicken retail push if fuel pricing freed

Essar to quicken retail push if fuel pricing freed

New Delhi: Private retailer Essar Oil will speed up planned expansion of its retail network if the government decides to deregulate fuel prices, a senior company official said on Tuesday.

S. Thangapandian, head of marketing, said Essar plans to increase its retail network to 1,700 by end-March from the current 1,342.

“Speed of planned expansion will be quicker if fuel prices are decontrolled . It (expansion) may happen by January instead of March," he told Reuters.

A ministerial panel on Monday deferred till next week a decision on accepting the recommendation of a government panel that suggested market-driven prices for fuels.

Thangapandian said market-driven prices for fuel would spur investment in the petroleum sector and result in demand conservation, besides allowing the government to divert the huge subsidies to programmes that benefit a larger percentage of the population.

“Only five to 10% of the population directly buy auto fuels; instead of subsidising this small population it makes sense to use these hefty subsidies for social, infrastructure programmes that will benefit larger population," he said.

The federal government on Monday said it had given a subsidy of $73.51 billion to state-run fuel retailers in the last seven years to 31 March, 2010, for selling fuel at below-market rates.

Private fuel retailers Essar Oil and Reliance Industries had together captured about 17% of the domestic retail market for diesel and accounted for 10% of petrol sales by 2005 before heavily subsidised sales by state-run firms knocked them out of the arena.

Thangapandian said fuel sold through Essar’s network was costlier by up to Rs1.50 a litre compared to state-run refiners.

The Essar group operates a 280,000 barrels-per-day refinery in India and aims reach a capacity of 360,000 barrels per day by March 2011.