STOCK MARKET DESK

Reliance Industries will shut down nearly two-third of its 1,400 petrol pumps in next couple of weeks as it is unable to match the fuel price offered by state-run retailers, who get subsidy for selling fuel below the cost.

The company plans not to replenish petrol and diesel stocks once the existing lot at its retail outlets get exhausted. Reliance will close about 900 company operated petrol pumps and according to industry sources has sent internal mails for a phased closure.

The owner of nation's largest refinery suffered huge losses despite selling petrol and diesel at prices higher than the state-run retailers Indian Oil, Hindustan Petroleum and Bharat Petroleum. On an average, petrol from Reliance outlets costed between Rs 4 and 5 a litre more than the PSU pumps.

Reliance still lost Rs 3.4 a litre on petrol and Rs 5.8 per litre on diesel and had seen its market share fall from 14.3% to less than 1% in diesel.

Public sector retailers too lose Rs 10.93 on sale of every litre of petrol and Rs 14.66 per litre on diesel but the losses are made up by issue of oil bonds by the Government and discounts from ONGC, GAIL and Oil India. The same compensation is not given to the private retailers like Reliance and Essar.

The company had invested about Rs 4,000 crore in setting up close to 1,400 retail outlets for selling petrol and diesel in the country. Out of these, Reliance owns and operate about 900 outlets. The remaining 500 dealer operated pumps would continue to operate. Essar Oil which has set up 1,100 petrol stations in the country is not closing shop as yet, so is Shell which operates a handful of outlets in the southern India.