Meter rising

New Delhi, Aug. 2: Fuel retailers of Reliance Industries are up in arms demanding compensation for the slump in sales since May when the private refiner ratcheted up petrol and diesel prices at its pumps to levels that were higher than the state-owned Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum.

The dealers, who have made substantial investments in setting up petrol pumps under the Reliance brand, fear that the alarming drop in sales will pitch them into bankruptcy as they have to pay back loans to banks.

They now want the company to compensate them for the entire loss. Although Reliance Industries had recently raised dealers’ commission, it did not help as the sales volumes had dried up. One report said the retailers could start an indefinite strike from tomorrow but this could not be independently confirmed.

As many as 50 per cent of the 1,200-odd petrol pumps selling Reliance products are dealer-owned. Petrol sold at Reliance outlets is priced at Rs 2 per litre above that charged by the public sector companies, while diesel is costlier by Rs 3 per litre.

Reliance Industries had first raised petrol prices in May to Rs 48.74 a litre followed by a second hike on June 6 to Rs 52.71 per litre.

Rattled by the protest, the company has now offered to bear their interest burden for the first three months.

The dealers do not appear to be convinced by the company’s argument that it is holding talks with the government to grant it subsidy on the same lines as public sector companies after which it will reduce prices. The dealers are looking for an immediate financial package.

Senior government officials feel Reliance cannot be equated with the public sector oil companies which sell kerosene and LPG to domestic consumers at highly subsidised prices. Reliance, on the other hand, sells its LPG and kerosene to the public sector companies at international prices. Similarly, the company gets a much higher price for its natural gas produced at the western offshore Tapti and Panna-Mukta fields than what ONGC gets for its gas.

According to petroleum ministry sources, Reliance has only a 4 per cent share in the petrol market but it has a higher 9 per cent share in retail diesel sales.

Most of the retail outlets of Reliance are on the highways where diesel sales are higher compared to petrol, which sells mainly in the cities.

However, the filling stations of the company have a higher concentration in Gujarat and adjoining areas of Maharashtra since its refinery is located in Jamnagar.

The company does not have a strong presence in the other states and has been lobbying to gain access to the depots of the PSU firms which have product sharing arrangements among themselves.