Reliance, Essar And Shell Planning To Re-Enter Petrol Pump Business

Private refiners Reliance, Essar and Shell plan tobuoyancy,” CARE said in a statement here.
re-enter the petrol pump business in a big way if“In the past, the entry of private players in
the government goes ahead with the Kirit Parikhthe retail fuel market had resulted in an erosion of
panel’s recommendation to have free marketabout 10 per cent in the market share of the
pricing in petrol and diesel.public sector companies.”
The private refiners had shut their pumps downSources in the state-owned refiners said they
when crude oil jumped to $147 a barrel and thewould suffer immensely if the government just
state-owned refiners compensated for selling fuelfreed petrol and diesel prices, while leaving
below costs by the government.kerosene and LPG untouched.
“Private refiners are closely watching the“Private sector players would then have a
government move. Free market pricing of petrolfield day because they can sell petrol and diesel at
and diesel now is the most appropriate as it ismarket-determined prices. Two-thirds of our
around $70 to $80 a barrel,” industry sourceslosses are from cooking gas and kerosene,”
said.the sources said.
The first indication of their aggressive intent cameThe private firms had a market share of 14 per
from Essar group chairman Shashi Ruia who saidcent in 2006, but it had gradually reduced to a
Essar Oil planned to increase its petrol pumps tonegligible sum following the spike in crude prices
2,000 in the next few months from 1,450.and absence of a compensating mechanism.
Sources in Reliance Industries said they wouldReliance had to shut its retail operations down
re-enter the business if the government providedafter global crude oil prices peaked. Essar and Shell
a level-playing field to the private players.India also closed some of their pumps, but when
Terming it a landmark, Credit Analysis andcrude prices softened, they restarted some
Research (CARE) Limited has called for theoperations.
immediate implementation of the Kirit ParikhArguing for free market pricing in its report, the
Committee report that has recommended freeingParikh committee said “a market-determined
of petrol and diesel prices and a steep hike in LPGpricing system for petrol and diesel can be
and kerosene rates. This was the key to cuttingsustained in the long run by providing level playing
subsidies, it said.field and promoting competition among all players,
“The government needs to strike a balancepublic and private, in the oil and gas sector.”
between reducing the subsidy burden on theThe report said a spike in crude price from $70 a
public sector companies, reducing the fiscal deficitbarrel to $120 a barrel would result in an increase
and managing the current inflationary scenario,of around Rs 160 per month for two wheeler
given that the economy is in the process ofusers and less than Rs 1,000 per month for car
revival and is attempting to restore itsowners.