Pressure point

New Delhi, March 25: Pressure has started to mount on the government to change the rules of the game for oil refiners and compensate private players for the losses they suffer by selling petrol and diesel at uneconomic prices.

The demand from private refiners such as Reliance Industries, which has threatened to close its network of 1,400 petrol pumps, comes at a time when crude oil prices have surged past $100 a barrel.

State-owned oil refiners — Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation — are being compensated for the losses they are suffering from selling fuel below cost through the issue of oil bonds.

They also receive discounts from upstream oil companies such as GAIL (India), Oil and Natural Gas Corporation and Oil India.

Three private players — Reliance Industries, Essar Oil and Shell — have petitioned the Petroleum and Natural Gas Regulatory Board seeking parity with state-run firms.

The petition has urged the regulator to initiate adjudication proceedings against the oil PSUs that indulge in unfair and restrictive trade practices in the sale of petrol and diesel.

According to industry sources, Reliance and Essar have decided to review the plans for their loss-making petrol pumps.

Reliance said it could shut its 1,400 retail outlets from the beginning of April. Essar, which has 1,000 pumps, plans to gradually switch to a bulk supply model.

Shell, the only global player to operate in fuel retailing with about 50 outlets, has already started selling only its premium brand of petrol and diesel.