The Hindu Business Line : Ministry rejects RIL demand for compensation

The difference
As on Aug 1, RIL is losing Rs 4.10 per litre on petrol; Rs 6.40 a litre on diesel.
Govt allows PSU retail cos to hike diesel, petrol prices by Rs 2 and Rs 4 per litre respectively.

New Delhi , Aug. 4

Reliance Industries Ltd (RIL) may have to take other measures to protect its petroleum retail business, with the Petroleum Ministry on Friday categorically rejecting its demand for compensation on par with the public sector oil companies to make up for the losses suffered on sale of petrol and diesel below cost price.

The Petroleum Minister, Mr Murli Deora, today said that there was no question of giving compensation to private players such as RIL.

Stating that Mr Mukesh Ambani, Chairman, RIL, did speak to him on the issue, the Minister said, "There is no question of subsidy for private players. We have sympathy but you do not expect the Government to fund private players."

The retail prices of fuel have been capped in a bid to shield the economy from soaring crude oil prices.

RIL has been seeking parity among players across public and private sector in marketing petrol and diesel.

RIL hoped that the Government would compensate the company along with the state-owned oil marketing companies for maintaining the selling price of the two products at the same level as PSU marketing companies.

As on August 1, RIL is losing Rs 4.10 per litre on petrol and Rs 6.40 a litre on diesel, as per the company. RIL has been arguing that it is not possible to sell commodities such as petrol and diesel at a higher price than that set by the PSU companies.

"Since last couple of months, Reliance's petroleum retail business has witnessed huge pressure as a result of unprecedented rise in the crude oil prices and inadequate increase in selling price of petrol and diesel," the company sources said.

PSU retail cos

To cushion the impact, the Government has allowed the PSU retail companies to increase the prices of diesel and petrol by Rs 2 and Rs 4 per litre respectively.

Through the price increase, about 16 per cent of the burden of under recoveries suffered by these entities has been passed on to the consumers and the balance portion is to be compensated through oil bonds, and assistance from upstream companies.

Private sector marketing companies were not included in the scheme of oil bonds and upstream assistance.

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