Private fuel retailers in India have started pricing petrol and diesel at market rates for the first time in over a year, according to sources. Reliance-bp Mobility Ltd (RBML), Nayara Energy, and Shell had been selling petrol and diesel at losses as they tried to match the below-cost rates of state-owned Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation. However, the fall in international oil prices over the last six weeks has brought retail rates at par with cost. Nayara Energy, the largest private fuel retailer in India, started pricing petrol and diesel at market rates in March, and RBML began selling diesel at par from this month. With oil prices dropping to USD 78 per barrel this week, RBML is offering Re 1 per litre discount over public sector rates at select petrol pumps.
Private retailers have claimed that state-owned oil marketing companies control over 90% of the market, leaving no room for them in fixing retail selling prices of petrol and diesel. However, the three public sector retailers, IOC, BPCL, and HPCL, have yet to fully recoup losses they incurred from selling petrol and diesel at rates below cost last year, which means that a cut in rates is not likely immediately. Although the three public sector retailers have broken even on petrol, there are some losses on diesel, an oil ministry official said.
Under-recoveries, or the difference between cost and retail price, was Rs 13.08 per litre for petrol and Rs 24.09 per litre for diesel at one point of time. Private retailers have raised prices of petrol and diesel by up to Rs 3 per litre over and above the public sector rates to cover some losses. Reliance-bp Mobility alone was incurring a loss of Rs 700 crore a month at the peak, while Nayara Energy raised prices. Private retailers have been highlighting their losses on fuel sales, but the oil ministry dismissed them, saying that Reliance-bp exported diesel to Europe and other countries at highly lucrative prices but was rationing supplies at its petrol pumps