Govt rejects RIL's plea on oil loss damages

The government today rejected Reliance Industries Ltd's demand for compensation equal to public sector oil firms, to make up for the losses it suffered on petrol and diesel sales.

"There is no question of giving compensation to Reliance," Petroleum Minister Murli Deora told reporters here.

RIL is 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, which are compensated for the losses through a combination of discounts from upstream companies like ONGC and issue of oil bonds.

"There is no need to favour only the PSU oil marketing companies (OMCs) in a partisan and non-transparent manner. Provision of similar support to the private sector does not increase the financial burden of the government of India, since denial of the support will only shift volumes from the private sector to PSUs to whom an equivalent subsidy will need to be paid," RIL had recently written to the petroleum ministry.

Deora said the Cabinet had, in June, decided on a burden sharing formula where the government, the oil firms and consumers were to share the impact of surging crude oil prices. "There is no proposal to give subsidy to Reliance," he said.

Reliance had suggested an increase in the cess on domestic crude and use of the revenue to moderate the excise duty on petrol and diesel, so as to place all players at par.

"Alternatively, oil bonds and upstream support should be extended to the private companies," it said.

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

"The role of the government is to ensure a 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 benefit from open, transparent competition," the company had written.