After Excise duty cut, ops unsustainable: Reliance-BP

New Delhi: RBML - the joint venture of Reliance Industries Ltd (RIL) and supermajor BP - has told the government that fuel retailing for the private sector in India has become unsustainable after market-controlling public-sector firms frequently froze petrol and diesel prices at rates way below the cost, sources said.

Despite a surge in oil prices, state-owned Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL) first froze petrol and diesel rates for a record 137 days beginning early November 2021 when five States including Uttar Pradesh went to the polls, and last month again went into a hiatus that is now 47 days old.

"They (Reliance BP Mobility Ltd) has written to the petroleum ministry over the fuel pricing issue," a highly placed source in the government, who didn't want to be quoted, told reporters here. While RBML is scaling down its retail operations to cut some of the Rs700 crore loss it is incurring every month, Russia's Rosneft-backed Nayara Energy has raised prices of petrol and diesel by up to Rs3 a litre over and above the PSU rates, to cover for some losses.

The government over the weekend cut excise duty on petrol by Rs8 per litre and by Rs6 a litre on diesel. This reduction was passed on to the consumers and not adjusted against the under-recovery or losses oil firms make on selling petrol and diesel.

Two sources aware of the matter said RBML contends that PSU oil marketing companies control over 90 per cent of the market and are the price-setters, leaving no room for private fuel retailers in fixation of the retail selling price of petrol and diesel. PSUs have not increased fuel prices in line with escalating international crude prices eventually leading to huge under-recoveries (losses) for all fuel retailers since February 2022.