RIL may miss fuel outlet deadline

Reliance Industries Ltd (RIL) is set to miss its deadline for re-opening all 1,400 retail fuel outlets by March-end. Till December, the company had 750 operational retail outlets, up from 320 such outlets in April last year.

"We are opening all our outlets one by one. In the next few months, we would be opening the other closed outlets. A lot of infrastructure details have to be looked into before re-opening of these outlets," said a company official.

RIL says it is also trying to address the perception that fuel at its outlets is costlier than the state-run oil marketing companies (OMCs). The company had shut down its fuel retail outlets in 2008 when global oil prices surged to $150 a barrel. While the state-run OMCs were providing subsidies to customers, private fuel retailers couldn't survive in the market.

RIL says it has around 3.5 per cent market share, compared with around 12 per cent fuel retailing market share in 2005-06.

The top three state refiners - Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp - control over 95 per cent of the market.

The Mukesh Ambani-led company is also offering discounts on diesel and petrol at few fuel stations in Gujarat and the scheme may be widened if sales increase. "Indian customer is used to having a uniform rate across all outlets. We had initially sold fuel at rates higher than that of OMCs. But customers still have this negative perception that fuel rates at RIL outlets are higher than that of OMCs. We would be addressing the sales issue in various ways which I cannot disclose," the company official said.

RIL is offering a discount of Rs 2 per litre of diesel at few company-owned, company-operated (COCO) outlets. Around half of RIL's 1,400 retail outlets are COCO while the other half are company-owned, dealer-operated (CODO) and dealer-owned, dealer-operated (DODO).

At the end of December quarter, diesel sales at RIL's outlets were up 64 per cent from the previous quarter. Diesel is RIL's mainstay.

It had achieved the highest retail outlet throughput of nearly 200 kilolitres per month compared with key competitors.

At its company owned, dealer operated (CODO) outlets, RIL is offering a discount of Rs 1 per litre of diesel and petrol. It has offered to bear 75 paise of the discount and the rest will be borne by the dealers. The discount schemes, dealers said, would be around till May 2016.

RIL dealers said given the company's handsome gross refining margins (GRM), it could offer more discounts to customers. The gross refining margin measures earnings from turning every barrel of crude oil into fuel. RIL has been posting strong gross refining margins, defying the Singapore benchmark by $3-4.5 a barrel for two consecutive quarters.

The October-December 2015 quarter saw its GRM increasing to $11.5 a barrel from $10.6 a barrel in 2014-15. A major factor, RIL said, was reduction in the crude oil basket cost.