Private oil firms consider re-entering retail sector

India’s public sector oil marketing companies (OMCs) are once again gearing up to face competition from private sector peers Reliance Industries (RIL), Essar Oil and Shell in petro-retailing. With the dramatic drop in crude oil prices from more than US$140 to around US$40 per barrel, petroleum product retailing has become viable again for private sector companies who are not eligible for government subsidies, unlike public sector firms. The government has agreed to deregulate prices of petrol and diesel fuel, following the price drop. In related news, state-run oil marketing companies (OMCs) are said to be planning to put the expansion of their retail outlets back on track as lower international crude oil prices has enabled them to register profits on most of the petroleum products they sell. The three publicly owned OMCs—Indian Oil Corp. (IOC), Bharat Petroleum Corp. Ltd. (BPCL) and Hindustan Petroleum Corp. Ltd. (HPCL)—were asked by the government in July 2008 to stop “indiscriminate” setting up of petrol pumps, to avoid mounting losses on fuel sales.
(January 3, 2009)