Reliance Industries Ltd, India's largest private sector oil firm, has sought compensation similar to what is extended to public sector fuel retailing companies for selling petrol and diesel below cost price.
"After APM (Administered Pricing Mechanism) was demolished in 2002, I (Reliance Industries) should be treated on par with public sector companies," RIL director R K Narang told reporters on the sidelines of a panel discussion on petroleum pricing organised by TERI in New Delhi on Monday.
He said if part of the losses incurred on petrol and diesel sales by Indian Oil Corp, IBP, Bharat Petroelum Corp and Hindustan Petroleum Corp were made up through issue of government bonds and discounts extended by upstream firms like Oil and Natural Gas Corp, Oil India Ltd and GAIL, then the same should also be given to Reliance.
Reliance, which has set up over 900 petrol stations throughout the country, commands 9 per cent of the petrol and diesel market share.
While the retail selling price of petrol barely makes up for its cost of production, diesel was currently being sold at a loss of Rs 2 a litre.
When asked why was Reliance selling fuel at a loss when it was unlike the PSU firms, not bound by government pricing diktats, Narang said: "I cannot sell (petrol and diesel) at a price more than my competition."
Reliance, he said, had been "unfairly" asked to extend discounts to the tune of Rs 750 crore (Rs 7.5 billion) on petrol, diesel, LPG and kerosene it sells to PSU retailers. "Its illogical and irrational call made (on Reliance). I am not in marketing of LPG and kerosene yet I have to pay Rs 750 crore."
"We should be treated on par with public sector firms," Narang said.
Reliance Industries has made out a case for being compensated on par with public sector firms before the high powered Rangarajan Committee appointed by the prime minister to look into the pricing of petrol, diesel, LPG and kerosene.
Narang said he did not agree with the subsidy sharing scheme of the government. The oil companies are bleeding as a result of the, he added.
Under the subsidy sharing scheme, the losses made by IOC, BPCL, HPCL and IBP on petrol, diesel, LPG and kerosene sale are shared by upstream firms, stand-alone refiners - Reliance, Kochi Refinery, Chennai Refinery and Mangalore Refinery and the retailing firms equally.
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