Petroleum retailing to evade hardships of dealers & consumers
04 Aug '06
3 min read
In the context of soaring crude prices in the recent past,- there exists a non-level playing field amongst Public Sector and Private Sector Oil Companies in the Indian Petroleum Retail Marketing sector.
The Government of India has decided to provide subsidies to Public Sector Petroleum Retail companies. As per estimates, the GOI provides Rs. 5.77 per litre of Subsidy for Diesel sold through outlets of PSU oil companies.
The private sector oil companies have been kept out of the ambit of the Government sponsored survival package. Partially, to part compensate the losses thus incurred due to absence of a level playing field, Reliance Industries Limited (RIL) increased the price of Diesel by Rs. 2.5 per litre over the rates offered by PSU, who enjoy subsidy benefits.
This increase, after accounting for a higher dealer commission and state and central levies is equivalent to less than a quarter of the subsidy provided to PSUs by GOI. Even with this differential in price, RIL is incurring substantial losses in retail marketing. Further, this in turn has affected the operations and consequent revenues of RIL dealers.
Over the past three years, RIL has set up a nation wide extensive Petroleum Retail Outlet network throughout India with over 1250 Retail Outlets. Out of these, RIL owns and operates more than 400 outlets.
RIL's value proposition of assured quality and quantity (Q&Q) backed with top-of-the line service at its outlets found instant acceptance with consumers nationwide. In short span of less than 3 years, RIL garnered around 15% of the Diesel (HSD) market in India.
marketing@alchempro.com
