March 28, 2008
Reliance to shut down petrol pumps
Reliance Industries has decided to shut down about 900 of its 1400 fuel outlets in the country in the next few weeks. However the 500 dealer owned fuel stations may continue operations. The record surge in the crude oil price and the absence of government subsidies are the reasons attributed for the company’s sudden decision to close all the fuel pumps. It is known that Reliance sells fuel at prices 15% higher than the state run outlets .Currently the rate of petrol is around Rs 56/liter. The company has decided not to re-fuel any of its retail outlets so it eventually leads to the closure of all the pumps till the stocks last. The public sector oil companies including the likes of Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation sell fuel below the cost price and have incurred a large amount of losses. However the losses incurred are compensated by the Government with adequate subsidies. Similar benefits are not applicable to private sector companies. The other two major players in the Indian fuel market, Shell and Essar have petitioned the government seeking parity with their state-run competitors, according to the news source. The 55,000 employees of the Reliance outlets will face the risk of losing their jobs. It remains to be seen if Reliance could provide them some alternate job to help them support their livelihood.