The Telegraph
Wednesday , May 21 , 2014
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Essar focus on auto fuel retailing

New Delhi, May 20: Essar Oil, the country’s second largest private refiner, is planning to focus on retailing of auto fuel amid strong signs of the new government letting diesel prices be determined by the market.

“Essar Oil has about 1,400 retail outlets across the nation, with over 300 in various stages of commissioning and a few operational. The company is reviewing its retail strategy to tap the growing gasoline demand by additionally targeting city centres for new outlets,” L.K. Gupta, managing director and CEO of Essar Oil, said.

He said “the company will offer outlets under three formats of dealer-owned-and-operated, company-owned-and-operated and company-owned-and-dealer-operated structures”.

Private refiners, which once had a 17 per cent share of the market, are planning to revive their fuel retailing operations as the market pricing of diesel looks a distinct possibility. The cabinet had in January 2013 decided that diesel prices should be raised by 40-50 paise a litre every month until losses on the fuel were wiped out.

Diesel prices have risen by a cumulative Rs 8.33 a litre in 14 instalments since January 2013. However, during elections the hike was put on hold as the government feared a voter backlash.

Diesel demand

Diesel consumption, which accounts for over 40 per cent of fuel sales, declined 1 per cent in 2013-14, its first fall in more than a decade, according to latest government data.

In a research note, ICICI Securities said the UPA government had taken baby-steps towards freeing diesel, while “a clear majority (in the Centre) should encourage the government to fast-forward the deregulation process through more frequent hikes (fortnightly or weekly). It can be more or less implied that deregulation is for sure”.