Price deregulation of auto fuel to pave way for private retailers re-entry

The proposed price-deregulation of auto fuels in the just-released Kirit Parikh panel report on petroleum product pricing is likely to pave the way for the retail market re-entry of private players. Reliance Industries (RIL) and Essar Oil (EOL) had closed their retail operations due to the lack of a level-playing field. They were unable to compete against the public sector who received government subsidies that enabled them to sell petroleum product prices cheaper than privately owned companies. While EOL has already started to ramp up its entire retail outlet network, RIL has only kick-started the process of opening its retail outlets. Deregulation of auto fuel prices means that upstream companies would not have to bear any subsidy burden. Hence, in the future, crude oil price realization could increase substantially from current levels. (February 8, 2010)