Private refiners Reliance, Essar and Shell plan to re-enter the petrol pump business greatly if federal government goes ahead with the Kirit Parikh panel's recommendation to have free market pricing in petrol and diesel.
The private refiners had shut their pumps down when oil jumped to $147 a barrel and the state-owned refiners compensated for selling fuel below costs by federal government.
'Private refiners are closely watching the government move. Free market pricing of petrol and diesel now is a very appropriate as around $70 to $80 a barrel,' industry sources said.
The first indication and health of their aggressive intent came from Essar group chairman Shashi Ruia who said Essar Oil planned to increase its petrol pumps to 2,000 over the following few months from 1,450.
Sources in Reliance Industries said they re-enter the company if the government provided a level-playing field to in which you players.
Terming it a landmark, Credit Analysis and Research (CARE) Limited has requested for the immediate implementation among the Kirit Parikh Committee report that has recommended freeing of petrol and diesel prices and a steep hike in LPG and kerosene rates. This the the factor in cutting subsidies, it identified.
'The government needs to strike an account balance between decreasing the subsidy burden on individuals sector companies, reducing the fiscal deficit and handling the current inflationary scenario, given that the economy is as you go along of revival and is trying to restore its buoyancy,' CARE said in the statement beneath.
'In the past, the entry of personal players in the retail fuel market had resulted in an erosion of up to 10 % in the marketplace share of the public sector companies.'
Sources inside state-owned refiners said they'd suffer immensely if federal government just freed petrol and diesel prices, while leaving kerosene and LPG unblemished.
'Private sector players would then have a field day because they will sell petrol and diesel at market-determined prices. Two-thirds of our losses are from cooking gas and kerosene,' the sources said.
The private firms a new market share of 14 per cent in 2006, but it had gradually reduced to a negligible sum following the spike in crude prices and absence of a compensating mechanism.
Reliance had to shut its retail operations down after global oil prices actually peaked. Essar and Shell India also closed a selection of their pumps, any time crude prices softened, they restarted some operations.
Arguing 100 % free market pricing in its report, the Parikh committee said 'a market-determined pricing system for petrol and diesel could be sustained actually run through providing level playing field and promoting competition of all players, public and private, in the oil and gas market.'
The report said a spike in crude price from $70 a barrel to $120 a barrel would result in an increase of around Rs 160 per month for two wheeler users and less than Rs 1,000 per month for motorists.