Citing losses on account of under-recoveries on sale of petrol and diesel, the ministry of petroleum and natural gas, government of India, has asked the oil marketing companies (OMC) to hold their plans of launching new retail outlets for the next two years.
The companies that were asked to stop their expansions include Indian Oil Corporation, Bharat Petroleum Corporation Limited, Hindustan Petroleum Corporation Limited and the Mangalore Refineries and Petrochemicals Limited.
Official sources from the ministry said that although no official ban was imposed, an advisory was being sent to the OMCs to end indiscriminate opening of new outlets as the market had reached a saturation point. Oil Secretary MS Srinivasan has said the country’s fuel subsidy bill would touch $42.5 billion for the current financial year, assuming global crude oil prices at $123 a barrel.
GC Daga, director of marketing, IOC, said, “We have to reduce our capex. We have decided ‘not to’ set up any retail outlets except the ones under construction and the ones we are planning at strategic locations, but they are negligible in number.”
In June, India raised petrol and diesel prices by about 10 per cent, its biggest increase in 12 years, but the hike lagged far behind the recent rally in crude oil prices, which soared to a record above $147 a barrel on Friday.
Besides these state-run companies, some private players including Relaince Petroleum and Shell have decided to close down several fuel outlets due to loses faced.
