In a move to pass on the benefits of reduced international rates to consumers, Nayara Energy, in partnership with Reliance Industries Ltd and bp plc, has begun selling petrol and diesel at a discounted rate of Rs 1 compared to state-owned retailers. This price reduction aims to stimulate domestic consumption and cater to the needs of local customers, with the discount set to remain in effect until the end of June 2023. Nayara Energy, which owns over 7% of the country’s petrol pumps, is selling fuel at the reduced rate in 10 states, including Maharashtra and Rajasthan.
Earlier this month, Jio-bp, a retail fuel joint venture between Reliance and bp, introduced a superior grade of diesel at a discount of Rs 1 per litre compared to regular diesel sold by state-owned companies. This enhanced diesel has the added benefit of cleaning engine deposits and improving fuel efficiency.
While Reliance-bp has focused on reducing the price of diesel, Nayara Energy has taken the initiative to lower prices for both petrol and diesel, positioning themselves below state-owned firms. Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL) had previously frozen retail prices when international oil prices surged after Russia’s invasion of Ukraine. Despite the subsequent decline in international prices, retail rates have remained unchanged for a record 14 consecutive months, as the state-owned companies aim to recover losses incurred during the period.
Due to the practice of selling fuel below cost, IOC, BPCL, and HPCL collectively reported a net loss of Rs 21,201.18 crore during the months of April to September. This resulted in private fuel retailers, such as Reliance BP Mobility Ltd, Nayara Energy, and Shell, losing market share as they were unable to match the below-cost prices of their dominant public sector counterparts.
However, the recent decline in international oil prices has allowed private retailers to align their prices with the competition or the market price. Although IOC, BPCL, and HPCL have also managed to break even, they have chosen to maintain retail prices in order to recover past losses. This strategy has enabled IOC and BPCL to post profits in the 2022-23 fiscal year, despite losses incurred during the first half.
Nayara Energy began pricing petrol and diesel at market rates in March, while RBML’s 1,574 petrol pumps started selling diesel at the same rates this month. Following Jio-bp’s introduction of discounted superior-grade diesel, Nayara Energy has extended the price reduction to include both petrol and diesel in 10 states.
The freezing of petrol and diesel rates by IOC, BPCL, and HPCL for 137 days from November 2021, coinciding with state elections, and the subsequent continuation of this hiatus since April 2022, has contributed to Nayara Energy’s market share expansion. With 6,376 petrol pumps across the country, Nayara Energy has emerged as a prominent player in the industry, while IOC, BPCL, and HPCL collectively own 78,567 out of 86,925 petrol pumps in India.
