The Hindu Business Line : New `Reliance Petrol' to cost Rs 2 more

Consumers in Delhi, Chennai and Kolkata would now have to pay in the range of Rs 46 to Rs 50 per litre for buying motor spirit from Reliance Industries Ltd (RIL) retail outlets.

RIL has gone ahead and announced a price hike even as the Petroleum Ministry continues to try to build a consensus on a price hike by the State-owned oil marketing companies (OMCs) for products such as petrol, diesel, cooking gas and kerosene.

RIL's increased price is for its motor spirit brand `Reliance Petrol' launched from Friday, as the company plans to move beyond its normal petrol, offering higher value to the customer, sources said.

The company has increased the price of domestic petrol by Rs 2 per litre plus local taxes. This in effect would mean that the retail selling price will increase from approximately Rs 2.52 per litre to Rs 2.92 per litre, depending on taxes and levies prevailing in different States.

The company has, however, not made any change in the price of diesel. This petrol price increase is effective from Friday.

Soaring crude

While the soaring international crude prices - hovering over $70 per barrel - are said to be the main reason for the increase, industry sources say there could be two other reasons for this revision - RIL claims to introduce new formulation that offers high performance and better fuel economy, and other being the heavy investments made by the company in technology and automation to ensure quality and quantity from its retail outlets.

Asked why RIL increased the price while the State-owned companies are still selling the product below cost, the sources said the other companies were in the public sector and the Petroleum Ministry has been taking steps to make good a part of their financial losses.

RIL as a private player had no such protection and had to formulate its own marketing strategy to survive.

But the sources were quick to point out that even with this increase, the company would be covering only a part of its financial deficit.

Compensation

RIL has been seeking compensation of Rs 1,187 crore from the Government for selling products below cost during 2005-06. This included Rs 103 crore under recovery on petrol and Rs 1,084 crore on diesel.

RIL retails 342 thousand metric tonne (TMT) of petrol and 3,599 TMT of diesel through its 1,300 odd retail outlets, mostly in the outskirts.

In contrast, the volume of sales by PSU companies - Indian Oil, Hindustan Petroleum, Bharat Petroleum and IBP - is 8,681 TMT of petrol and 40,308 TMT of diesel.

The company, according to sources, is not averse to reviewing this decision in line with the market trends.

In the current inflationary scenario branding of products had become very essential, sources added.

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