The official also denied notions of the company going slow on fuel retailing side.
Mumbai: The government move to make auto fuels cheaper by asking state-run oil companies take a hit will not impact Reliance Industries' retail fuel expansion plans, a top official has said. The official also denied notions of the company going slow on fuel retailing side.
After the fuel price deregulation, especially that of diesel in September 2014, RIL, which has licence to operate 5,000 pumps, had begun to reopen the shut pumps in a phased manner and so far it has re-commissioned only 512 of them, much slower than the rivals like Nayara Energy (formerly Essar Oil which operates over 3,500 pumps now) and Shell.
Reliance was forced to shut down its retailing business following the sharp increase in under-recoveries following the spike in global crude prices since 2011.
"In a broader sense, I don't think it (the forced price reduction) is going to affect what we are planning to do in terms of our fuel retail expansion. I don't think we are going to let this alter our strategy in terms of what we are doing," V Srikanth, the joint group chief financial officer of the company, told reporters Wednesday evening.
He, however, conceded that the company will have to cut the retail price due to competitive pressures. It can be noted that along with a reduction in the Excise duty to the tune of Rs 1.5 a liter, government had early October also asked the state-run oil marketing companies which have a dominate share of the fuel retailing market to take a hit of Re 1 on every litre of diesel and petrol.
Many BJP-ruled states followed suit with cut in VAT, to minimise the pinch of the rise in oil prices on commoners. Sriknath said RIL's dependence on the oil retailing is very minimal, stating that only up to 5 per cent of its refining output of over 60 million tone is consumed in the domestic market and therefore, the impact from an overall numbers perspective is "very small".
When asked if the company is going slow on retail expansion, he denied so, saying the perception may be "in the context of some" rivals but his company is moving as per its retailing plans. He said RIL had signed an agreement with British oil major BP on the fuel retailing front, but it has not been enforced on the ground as it may be lacking in specifics.