After RIL-bp, Nayara Energy sells petrol, diesel at Re 1 less than PSUs

After Reliance Industries Ltd and its partner bp plc in the UK, Nayara Energy – the country’s largest private fuel retailer – began selling petrol and diesel in Re 1 for less than the fuel sold by state-owned retailers.

While the state-owned Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) continue to hold prices despite lower international prices, private fuel traders have begun to pass on the benefits to consumers.

“To further stimulate local consumption and better meet the needs of local customers, we have introduced Re 1 discount at our retail outlets until the end of June 2023,” said a spokesperson for Nayara Energy. “We believe in being a strong partner for India’s energy needs and will continue to meet the country’s consumer demand.”

Nayara Energy, which owns more than 7 percent of the 86,925 petrol pumps in India, sells petrol and diesel at 1 ri per liter lower than those offered by IOC, BPCL and HPCL in 10 states such as Maharashtra and Rajasthan.

Earlier this month, Jio-bp, the fuel retail joint venture between Reliance and BP, started selling high-quality diesel fuel at Re 1 per liter cheaper than regular or standard diesel sold by state-owned companies.

Additive-enhanced diesel helps clean dirt deposits in engines and can improve fuel efficiency.

While Reliance-bp has priced diesel below its PSUs, Nayara sells both diesel and petrol at prices below SOE’s.

IOC, BPCL and HPCL froze retail prices when international oil prices soared in the wake of Russia’s invasion of Ukraine last year. While global oil prices fell, retail prices continued to wait for the 14th consecutive month as they recoup the losses incurred last year.

Prices of crude oil, which is converted into fuels like gasoline and diesel at refineries, have soared to more than $100 a barrel on fears of supply disruptions following Russia’s invasion of Ukraine in February last year. While there was no interruption in supply, rates continued to remain flat for several months afterward.

To insulate domestic consumers, they have stopped daily price revisions from 6th April 2022. As a result of selling fuel below cost, IOC, BPCL and HPCL recorded a combined net loss of Rs.21,201.18 crore during the April-September period.

During this period, private fuel retailers Reliance BP Mobility Ltd (RBML) and Rosneft-backed Nayara Energy lost market share because they were unable to match frozen prices below cost to dominant public sector retailers.

But the decline in global oil prices since March has helped bring retail prices on par with PSU competition or market price.

IOC, BPCL and HPCL also broke the equation but continued to maintain retail prices to make up for previous losses. This helped IOC and BPCL turn a profit in 2022-23 (April 2022 to March 2023) despite losses in the first half.

Industry sources said Nayyara began pricing petrol and diesel at market rates sometime in March, and 1,574 RBM petrol pumps began selling diesel at par from this month.

This month, Jio-bp introduced high-quality diesel at lower prices than regular diesel sold by state-owned enterprises. Nayyara followed suit with a similar discount on petrol and diesel in 10 states.

The IOC, BPCL and HPCL froze petrol and diesel prices for the first time for 137 days starting from early November 2021 when five states including Uttar Pradesh went to the polls. A second round of downtime began on April 6, 2022, and is still ongoing.

Nayyara Power Company owns 6,376 petrol pumps in the country. IOC, BPCL and HPCL own 78,567 out of 86,925 fuel pumps in the country.