Oil Retailing: Reliance seeks level playing field

Reliance Industries, 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.

Reliance, 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, Ashok Dhar, vice president (petroleum business) of Reliance Industries, said.

He said the private firm 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 licence to market petrol and diesel in March 2002, we were promised market-determined pricing. When the government keeps prices artificially lower at 95% 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 subsidised even for petrol and diesel," he added.

Reliance demanded that the government should subsidise consumers rather than products, and shift to a specific duty regime instead of the current ad-volarem structure where the tax component increases with every increase in price.