Reliance offers Discounts on Petrol and Diesel

Reliance Industries Limited (RIL) is offering discounts to its customers at its retail outlets for fuel. The decision came within two months of diesel prices being market-linked.

Benefits

The retailers and dealers have said that RIL is offering a discount of Rs. 5 for petrol worth Rs. 300 and Rs. 10 for diesel worth Rs. 1000. An RIL executive has confirmed that for diesel worth Rs. 12,000, the discount extends upto Rs. 225. A senior RIL executive has confirmed this development.

Bulk buyers and transporters who facilitate transporting of fuel to remote locations will find these discounts attractive and beneficial.

These discounts will widen the customers’ base for the dealers. An RIL dealer from Gujarat said, “Post deregulation, our business has picked up pace, but we need to provide discounts for attracting more customers.”

RIL’s re-opening of outlets

In May 2008, RIL had shut its fuel pumps due to losses. It was selling fuel at rates much higher than the subsidised prices of state-owned oil companies.

RIL has 1,400 outlets and operates 300 outlets. RIL has re-opened a few of its outlets post the diesel de-regulation on October 18th.RIL dealers said that, “Some have agreed to re-open their outlets, while others are still demanding an increase in dealer commission.”

A few of RIL dealers who are demanding higher commission from the company have refused to re-open their outlets.

An RIL dealer informed, “Some dealers are claiming losses for non-operation of their retail outlets since four years. They do not plan to re-open the outlets till they are reimbursed. However, others have softened their stand and plan to begin operations at their outlets.”

A few company-owned pumps have already begun selling fuel. Around 150 dealer-owned, dealer-operated; or company-owned, dealer-operated outlets are expected to re-open soon.

At company-owned, dealer-operated outlets, RIL looks at the cost on account of services.

What the dealers say?

Dealers saythey have invested between Rs. 2 crores and Rs. 4 crores in each outlet. The cost of land is between Rs. 1.5 crores and Rs. 3 crores, depending on the location. Further, they additionally have to shell out Rs. 30 lakhs to Rs. 1 crore for maintaining services at the outlets.

According to dealers, RIL has communicated to them that it will revise their commissions after the retail outlets are re-opened. Dealers are looking out for a bank cash credit facility, under which RIL would provide loans to the dealers at reduced rate of interest than market rates.

“Earlier, this cash credit facility was in place which has now been discontinued. We are demanding that RIL begin this facility again so that we can spruce up our outlets. Till a few years ago, banks provided us with cash credit for their products which they were to repay in 15 days or less,” said a dealer.

RIL has one of the largest networks with state-of-the-art infrastructure, among private players. Dealers also informed that Essar Oil has no plans to offer discounts in the near future.

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