India’s private refineries and retailers wait for diesel deregulation

During an industry conference held in December, India’s privately-owned refineries and fuel retail companies said they will not expand until the government lifts its control over prices of diesel fuel. India, Asia’s third largest economy, has been struggling to tame inflation, which has remained above 9% for 11 months till October 2011. Reliance Industries Limited, a Fortune Global 500 company and India’s largest private sector company, says that only 600 of its 1,400 retail fuel stations are operating. Last June, the government lifted state control over gasoline prices but prices of diesel fuel and cooking fuels are still regulated. Gasoline accounts for only 10% of total fuel product sales, while diesel fuel accounts for about 40%. Although state-run fuel retailers are selling diesel fuel and cooking fuels at discounted prices, the government compensates for their retail losses with cash subsidies. (December 10, 2011)