The Hindu Business Line : Reliance Ind still hopeful of Govt compensation

Even though the Government has declined to extend any compensation package for private sector oil retailing companies, Reliance Industries Ltd (RIL) is still hopeful of getting Government support on selling petroleum products at below import cost in local markets.

"As far as Reliance is concerned, we are still hopeful of getting Government support in the form of oil bonds or any other form on selling sensitive oil products in the domestic markets," Mr P. Raghavendran, President (Refinery Business), RIL, said.

"It's not right on the part of the Government to say that they will not help us. We have put in almost Rs 5,000 crore in the domestic oil sector. Some solution has to be found."

The Petroleum Ministry had recently ruled out any kind of financial support for private oil marketing companies.

Reliance has sought Government support, similar to those given to State-owned oil marketing companies, to offset revenue loss it incurs on selling petrol and diesel below actual cost.

The company has temporarily suspended commissioning of new retail stations as it was suffering huge revenue loss on sale of petroleum products, he said.

"All our retail outlets across the country are running on limited volumes and we have temporarily put on hold commission of new retail outlets."

Reliance currently operates 1,280 retail outlets in the country. Mr Raghavendran said that another 400 retail fuel outlets were ready for commissioning. "But we have put them on hold because of the losses we are suffering on domestic sale of petrol and diesel."

RIL is providing support to its dealers to overcome cash flow problems, he added.

Reliance's current diesel sales have fallen to 50,000 tonnes from five million tonnes in April, while petrol sales have dropped to 300,000 tonnes from 760,000 tonnes, he said.

As regards the new 29-million-tonne refinery at Jamanagar, he said that though it was an export- oriented project Reliance may sell its product in local markets.

"All options are open, including retail sales in local markets, though our Jamnagar facility is an export-oriented unit."

The project work is progressing well and is on schedule. The refinery is expected to begin operations by December 2008.

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