RIL gets ministry rap for oil retail delay

The petroleum ministry has rapped Reliance Industries for failing to meet its obligations of opening and operating 10 per cent of its petrol and diesel retail outlets in remote and low-service areas.

In its reply to a recent ministry communication to this effect, the company has said that this was because of the government control on prices of auto fuels resulting in losses from the overall fuel retailing business.

RIL, along with private sector companies, Shell and Essar, was given permission to retail automobile fuels in the country in 2002. RIL's plan was to open almost 5,000 retail outlets across the country, but the company has so far opened around 1,800 retail outlets.

Most of the company's retail outlets are located on national highways, which are high-revenue areas.

"The number of retail outlets that the company has opened in remote and low-service areas is far less than the 10 per cent obligation. Moreover, most of the outlets that they have opened in remote areas are not running," a government official said.

An RIL spokesperson said that as the government did not compensate the company for the losses it incurred on retailing petrol and diesel, it had not been able to meet its obligations of servicing the remote areas.

In a letter to the petroleum ministry, RIL says: "We hope that the government may change its policy of selective compensation and treat all players equally."

The Mukesh Ambani-controlled company also says that the "authorisation of marketing fuels is a consequence of the stated policy (of allowing fuel prices to be determined by the market)", adding that the "unfulfilled promise of market-driven pricing leaves no scope to subsidise operations in low-service and remote areas".

The public sector oil marketing companies are compensated for their retailing losses by a mechanism through which the government, the state-owned oil exploration companies (such as ONGC) and the oil marketing companies (such as Indian Oil) equally share the losses.

RIL on an average sells its petrol and diesel at Re 1 a litre higher than the government-owned oil marketing companies. This has resulted in RIL losing its market share to around 4.3 per cent from around 13 per cent in the middle of last year.

The government-owned oil marketing companies "� Indian Oil, Bharat Petroleum and Hindustan Petroleum "� too are going slow on opening new retail outlets but are focusing on modernising existing outlets to improve appearance and provide facilities to customers.