Reliance to cut fuel price, aims to regain lost share

MUMBAI: Reliance Industries (RIL) has decided to cut the price of retail petroleum products like petrol and diesel in its retail outlets. This downward revision will be in effect from October 1.

With the softening of international crude oil prices, the company has decided for a downward revision of prices with effect from October 1. “We will continue making losses, however, with this reduction the company will gain part of the market share lost to oil PSUs,” a company official said. He refused to comment by what amount the company will cut its prices. At present, RIL sells petrol and diesel at Rs 2.5 above oil PSUs’ prices.

However, sources believe the company will reduce its retail prices by Re 1 and will still sell at Rs 1.5 above the oil PSUs as it is not in a position to bring the prices at par with oil PSUs. Even by cutting its prices by Rs 1, RIL will be losing over Rs 2 on the sale of per litre of petrol and diesel.

The reduction in prices will bring relief to its dealers who operate under the dealers owned dealers operated (DODO) & company owned dealers operated (CODO) model. Earlier, the company had offered a compensation package to its dealers under COCO & CODO by offering higher margins and options to compensate at the rate of 12.5% on return on investment.

Reliance, which notched up its market share of around 14% in the past two years lost it even faster and its current market share is around 1.5%, because of the differential in the price with the oil PSUs.