New Delhi, Jan. 11: The government is considering greater competition between private and PSU entities in oil retail.

This follows the strike by oil PSU officers which choked supplies and severely hurt the economy.

“The government will seriously consider how to associate private players in the system. But whether the decision will be positive or negative, I cannot say,” petroleum secretary R.S. Pandey said on the sidelines of the country’s premier oil and gas conference, Petrotech 2009.

Reliance and Essar had set up retail outlets which had to be closed when crude prices shot up. The pumps could not withstand competition from PSU firms who received subsidies to keep petrol and diesel prices low.

Both the private firms had sought subsidies from the government, but they were not approved.

However, the dip in crude prices has eliminated the need for subsidies while once again, turning the business profitable for all.

Petroleum minister Murli Deora said fuel prices might be deregulated for PSU firms by February if crude stayed at $45 a barrel. This could induce greater competition, analysts said.

The present value of crude at $40 a barrel provides an opportunity for deregulation.

Analysts said deregulation would increase competition and ensure improved supply.

At the same time, the government might stop compensating the oil PSUs.

Essar Oil has operated over 1,000 outlets, while Reliance used to run around 1,400 petrol pumps.

With the slide in crude prices, Reliance has indicated it wants to re-enter the market.