Business

Reliance shuts petrol stations

Reliance Industries (RIL) has decided to close all its 1432 petrol pumps. It is because the subsidies given to the public sector oil retailing companies were making its business economically unviable. The company hasn’t sold off its stations – but is waiting for any favourable move by the government to extend the subsidies to the private players also. There are some other private players like Shell and Essar who are also fighting the losing battle.

When Reliance had entered the oil retailing business, it was the same time when I had cleared a written exam of HPCL and was to be interviewed by them. I made many visits to the petrol stations and offices in Bilaspur, to get to know the trade and issues. I also met many drivers. People preferred the oil from Reliance stores, because they were pure, when compared to the adulterated oil from the public stores. And not to be surprised that RIL got a market share of over 14% in no time. Most of its stores were running just nearby the public stores, and we could see long queues in front of them. RIL also brought in some innovations like printed receipts, latest meters and machinery, tie ups to run food courts in the campus and many more were yet to come. But, in the end, like many sectors in which public limited companies have got undue advantages, this also seems to be one another.

What makes me wonder is – is it really that Reliance made such a big mistake? The company is known for some very shrewd moves, and many of its manoeuvres have been possible because of governments’ supports. When the company decided to get into the oil retailing business, it knew very well that oil was one thing whose price needed to have a ceiling. And its demand for government subsidies is also misplaced: as government is already running petrol stations, why should it subsidies some other party which competes with its own stations? The conclusion is: let us wait and watch.

News Ref: ET