Nayara Energy Follows Reliance-BP, To Sells Petrol, Diesel At Re 1 Less Than PSUs: Report

Nayara Energy said, "To further stimulate domestic consumption and cater to local customers better, we have introduced a Re 1 discount in our retail outlets until the end of June 2023"

Indo-Russian oil firm Nayara Energy has announced to sell petrol and diesel at Re 1 less than the fuel sold by state-owned retailers. This comes after Reliance Industries Ltd and its partner bp plc of the UK announced similar price cuts.  According to a report by PTI, a spokesperson for Nayara Energy said, "To further stimulate domestic consumption and cater to local customers better, we have introduced a Re 1 discount in our retail outlets until the end of June 2023."

The report said that while PSU oil firms like Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL) have continued to hold prices despite a drop in international rates, private fuel retailers have started passing on the benefit to consumers.

According to the report, earlier this month, the retail fuel joint venture of Reliance and bp, Jio-bp started selling superior-grade diesel at Re 1 per litre cheaper than normal or regular-grade diesel sold by state-owned companies. The additive-enhanced diesel helps clean dirt deposits in engines and can improve fuel efficiency.

The nation's largest private fuel retailer Nayara Energy said, "We believe in being a strong partner to India's energy needs and will continue to serve the country's consumption demand."

Nayara Energy owns over 7 per cent of India's 86,925 petrol pumps. The company is selling petrol and diesel at Re 1 per litre less than that by IOC, BPCL, and HPCL in 10 states such as Maharashtra and Rajasthan, the news agency said. 

According to the report, while Reliance-bp has priced only diesel less than that of PSUs, Nayara is selling both diesel and petrol at rates below state-owned firms'.

IOC, BPCL, and HPCL had previously halted the increase in retail prices when international oil prices surged following Russia's invasion of Ukraine. Despite the subsequent decline in international oil prices, retail prices have remained unchanged as fuel retailers aim to recover the losses incurred during the previous year. Crude oil prices had exceeded $100 per barrel due to concerns over supply disruptions in the aftermath of the invasion. Although no disruptions occurred, fuel rates remained elevated for several months thereafter.

According to the report, in order to protect domestic consumers, IOC, BPCL, and HPCL ceased daily price revisions after April 6, 2022. This decision led to selling fuel at prices below the cost, resulting in a combined net loss of Rs 21,201.18 crore for the three companies during the period of April-September. Meanwhile, private fuel retailers such as Reliance BP Mobility Ltd (RBML), Nayara Energy (backed by Rosneft), and Shell experienced a decline in market share as they were unable to match the below-cost rates offered by the dominant public sector retailers. However, a decrease in international oil prices since March has helped align their retail prices with the competition from the public sector or the market price.

IOC, BPCL, and HPCL too have broken even but continue to hold retail prices to recoup past losses. This has helped IOC and BPCL post profits in 2022-23 (April 2022 to March 2023) fiscal year despite losses in the first half, the report noted. 

Industry sources told PTI that Nayara Energy initiated the pricing of petrol and diesel at market rates around March, while Reliance BP Mobility Ltd (RBML) recently commenced selling diesel at par at its 1,574 petrol pumps from this month.

Jio-BP and Nayara Energy offer discounted prices on superior-grade diesel and both petrol and diesel, respectively. Nayara Energy owns 6,376 petrol pumps, while IOC, BPCL, and HPCL collectively own 78,567 out of 86,925 petrol pumps in India.