Reliance Industries will shut down nearly two-third of its 1,400 petrol pumps in the next couple of weeks as it is unable to match the fuel price offered by state-run retailers, who get compensated by the Government for selling fuel below the cost.
Reliance will close about 900 company operated petrol pumps and has sent internal mails for a phased closure, industry sources said. The company plans not to replenish petrol and diesel stocks once the existing lot at its retail outlets get exhausted.
Huge losses
The owner of nation’s largest refinery suffered huge losses despite selling petrol and diesel at prices higher than the state-run retailers Indian Oil, Hindustan Petroleum and Bharat Petroleum. On an average, petrol from Reliance outlets is between Rs 4 and 5 a litre more than the PSU pumps.
Reliance still lost Rs 3.4 a litre on petrol and Rs 5.8 per a litre on diesel and had seen its market share fall from 14.3 per cent to less than a per cent in diesel. Public sector retailers too lose Rs 10.93 on sale of every litre of petrol and Rs 14.66 per litre on diesel but the losses are made up by issue of oil bonds by the Government and discounts from ONGC, GAIL and Oil India.
Reliance spokesperson was not immediately available for comments.
The company, sources said, had invested about Rs 4,000 crore in setting up close to 1,400 retail outlets for selling petrol and diesel in the country. Out of these, Reliance owns and operate about 900 outlets. The remaining 500 dealer operated pumps would continue to operate.
In Reliance’s retail chain, transporters had invested over Rs 524 crore in a transport fleet of nearly 3,745 trucks, who after the closure would be idle. Over 55,000 jobs, which had been created by Reliance retail operations at outlets, transporters and within the company are now at risk.