Shell ramps up fuel retail network to 74

NEW DELHI: Country’s only international fuel retailer Shell India has silently ramped up its petrol pump network to 74, a 50% jump in just one year, even as other private retailers fret about the lack of level playing field in the retailing business between the private players and government-owned companies.

After getting a licence to open 2,000 retail outlets in India in 2004, Shell opened only 50-odd pumps in over four years, citing predatory pricing by state-owned competitors — Indian Oil (IOC), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL).

A Shell official confirmed that the company has increased the number outlets and said Shell India has aggressive expansion plans. “We have 74 (retail outlets) up and running. A few more are in the process of commissioning,” the official, who did not wish to be named, said.

Petrol and diesel sold at Shell pumps are costlier by Rs 2-5 a litre (depending on the location), compared with those sold at a public sector fuel station.

It could not be ascertained whether Shell India has achieved break-even in its fuel retail business. The privately-held company declined to reveal its accounts and other details. The company, which does not have a refinery in the country, buys petrol and diesel from Mangalore Refinery & Petrochemicals (MRPL) and sells through its pumps.

“The company’s retail operation is running on reputation. As fuel retailer, it is the best in the country,” an oil sector expert and CEO of a private-sector refinery said requesting anonymity.

Shell India’s growth is in sharp contrast to Reliance Industries’ (RIL) fuel retail business. “Only 600 pumps of RIL are functional today, mainly in Rajasthan, West and South India,” a company official said on condition of anonymity. At present, the company has about 1,400 retail outlets, he added.

Interestingly, another private sector company Essar Oil is planning to nearly double its retail network. “We are going to increase (number of petrol pumps) to 2,500 by next fiscal (end),” Essar group chairman Shashi Ruia said in Delhi recently.

“It is likely that the private oil companies are expanding their retail business in hope that the government will soon deregulate pricing of auto fuel,” an official in IOC said. All the three private firms declined to comment on
this issue.

The government is expected to take a decision on freeing prices of petrol and diesel by Sunday or next week, a senior official in the oil ministry said.

“I have submitted a memorandum (regarding pricing of petrol, diesel, kerosene and cooking gas) to the Prime Minister and the finance minister,” oil minister Murli Deora said.

“We have also requested them (PM and FM) to compensate PSU oil companies the shortfall on account of SKO (kerosene) and LPG (cooking gas) for the current fiscal,” he said. The finance ministry has paid a cash compensation of Rs 12,000 crore to public sector oil retailers for the entire financial year, leaving a gap of around Rs 19,000 crore in their books.