The Telegraph
Since 1st March, 1999
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Reliance oil outlets spark price war fears

Calcutta, Sept. 7: The domestic oil companies are faced with a price war after March, when Reliance Industries (RIL) is expected to commence its retail operations.

Industry sources said the public sector oil companies had discussed the matter and could come up with a combined approach to face the competition.

Indian Oil Corporation chairman M. S. Ramchandran said the price war is a possibility when the government withdraws price controls totally.

“Every player will try to keep its own business and grow. So a price war in any sector cannot be ruled out,” Ramchandran said.

He also pointed out that Indian Oil Corporation, which currently has the largest retail network in the country, has geared up to face any kind of competition after March 2004.

IBP managing director Arun Jyoti said the price war was still on in several petro products, except petrol and diesel.

“After the oil sector deregulation, the price war has started in several product segments. So, if such a war is extended to petroleum and diesel we are ready to face it,” he said.

Sources said the four public sector oil companies were in the process of giving the customers more value-added services through multiple tie-ups, besides refurbishing the outlets thoroughly.

“Moreover, a cartel may also be formed among these companies to face any threat from the private sector players. A regional divide may come up based on the strengths of the respective companies,” they added.

Meanwhile, Reliance Industries is expected set up around 500 retail outlets during the current financial year. Since the company is focusing on selling high-speed diesel, the outlets are likely to come up mostly on the highways in Gujarat, Maharashtra and Madhya Pradesh.

The company, which has set up a 27 million tonne refinery at Jamnagar, has appointed overseas consultants Tattersfield Minale and Flying J for designing the outlets.

According to Reliance Industries sources, the company will invest around Rs 750 crore only for building the outlets, while an additional investment will be made for the branding.

“These outlets will have combined services of petrol pumps as well as telecom products. Other facilities like small eateries and rest rooms may also be provided,” they added.

To face the competition, the public sector oil companies like Bharat Petroleum Corporation Limited, Indian Oil Corporation, IBP and Hindustan Petroleum Corporation Limited are expanding retail networks.

All public sector companies put together, over 3000 new retail outlets are set to come up in the current financial year, sources said.

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