Reliance Industries Limited plans to cut down retail petroleum operations in the domestic market owing to rising losses from petroleum retailing business.
Reliance Industries has sent e-mails to its tanker operators in the eastern region stating that it had decided to reduce fleet size by 80 per cent on all-India basis from the current level as domestic operations have become unviable.
RIL has a dedicated truck tanker (TT) fleet size of 875 in the eastern region.
Reliance has told tanker owners that it could only retain close to 200 to service the present level of sales. The company has 14 per cent market share in the domestic retail market for petroleum products.
An official of the petroleum marketing division of RIL admitted that the situation had become difficult in view of losses from petroleum retail operations.
He argued that losses were owing to government policy, which treated Reliance in a manner that favoured public sector oil retailers such as Indian Oil, Bharat Petroleum and Hindustan Petroleum.
"The government has decided to provide oil bonds to PSU oil majors worth Rs 28,000 crore (Rs 280 billion). Such assistance has not been given to Reliance despite the fact that we are largest player in retail market," the official said.
A spokesperson of Essar Oil said it had closed down 350 petroleum retail outlets in last couple of months following losses. "We had 517 outlets in the country, but closed down 350 due to losses," he said.
According to him, Essar would reopen outlets once its refinery went on stream in third quarter of the current fiscal. The RIL e-mail said the company was having to bear all the losses on its own.
RIL had fixed the price of motor spirit and high speed diesel marginally over the price charged by oil PSUs.
The e-mail said, "Considering the situation, it has become extremely difficult to continue our high growth and we are forced to restrict our volumes".
HSD and MS of Reliance were dearer by Rs 2.40 per litre compared with MS and HSD sold by oil PSUs.
"To wipe out losses, RIL would have to increase prices by Rs 4 more but we cannot do it. We are already losing customers as our product is marginally expensive," the official added.
He said RIL was trying to retain additional 25 per cent tankers for chemical operations. "RIL cannot retain all because of falling volume, but we are trying to work out something," the official added.
The president of the West Bengal Tanker Owners Association, Shyamal Roy, alleged that Reliance violated the agreement by reducing its fleet size.
"Of 875 tankers catering to Reliance, 75 per cent are brand new, purchased following assurance from Reliance. The owners have already invested a lot of money and do not know what to do," he said.
The West Bengal tankers operates from Haldia, the logistics hub for Reliance supply to petroleum outlets in West Bengal, Orissa, Bihar, Jharkhand and eastern Uttar Pradesh.
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