India Inc may enter pump biz
If, the government keeps its word on deregulating diesel and petrol prices, it could mean more choice for consumers. More choice in terms of prices, improvement in fuel quality and service levels as well.
“We expect Reliance and Essar to again aggressively pursue their retail strategy,” says Mr Alok Deshpande of Elara Capital.
RIL, which is operating only half of its 1,400 outlets currently may take some time to re-start the remainder, but Essar would now start to benefit, he adds. Essar Oil was amongst the big gainers in the market today. Essar Oil’s CEO and MD, Mr Naresh Nayyar, said on Friday that in the long run, the hike and deregulation would benefit consumers and help provide better services.
During 2003-04, three private sector players – Reliance, Essar and Shell, had set up several thousand petrol pumps. They had managed to grab almost one-sixth of the total business in a short while. However, most of the private sector pumps shut down subsequently as petroleum prices rose and they couldn’t sustain fuel sales at a loss — as the public sector was doing.
Private sector pumps had managed to grab a disproportionate share of the market in a short while. This was partly because the first few pumps were set up in high traffic locations. However, consumers also preferred them as it was percieved that chances of adulteration — mixing kerosene oil in petrol and diesel — were lower in private sector pumps.
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