MRPL may opt for differential pricing at planned fuel pumps

New Delhi: State-owned Mangalore Refinery and Petrochemicals Ltd (MRPL) may consider a differential pricing option as part of its fuel retail plans.
A subsidiary of government-owned Oil and Natural Gas Corp. Ltd (ONGC), MRPL plans to open 100 outlets for the sale of petrol and diesel.
D.K. Sarraf, chairman and managing director, ONGC, said differentiation would be sought in terms of service, outlook, proximity and price. “This we will need to deliberate,” Sarraf told reporters.
India’s fuel retail market, with 52,864 outlets, is dominated by state-owned oil marketing companies (OMCs) such as Indian Oil Corp. Ltd (IOC), Hindustan Petroleum Corp. Ltd (HPCL), Bharat Petroleum Corp. Ltd (BPCL). Private sector companies such as Essar Oil Ltd and Reliance Industries Ltd (RIL) shut several retail outlets because they couldn’t match the prices at OMCs’ pumps.
A dynamic pricing model, wherein consumers pay marginally different rates for fuels such as petrol and diesel in a city, depending on the location of the outlet and the time of day, has been on India’s radar. HPCL, in fact, has acquired a “network planning and dynamic pricing tool” from US-based firm MPSI.
“Our board had already given in-principle approval for opening 500 outlets in south India in 2010. But, unfortunately, the market didn’t become conducive as MRPL was not an oil marketing company (OMC) and not eligible for getting under-recovery (support). We have been deliberating and keeping a watch on the market. After the deregulation of MS (motor spirit) and HSD (high-speed diesel), this is the right time to enter the retail market,” said Sarraf.
While MRPL has government approval to open 500 outlets, ONGC has permission for a further 1,100 outlets. “In case, MRPL needs to do more than 500 outlets, we have the licence within the group for another 1,100 outlets,” Sarraf added.
MRPL posted a loss of `1,712 crore in 2014-15 as compared to a profit of `601 crore in 2013-14 due to an inventory loss of `2,700 crore against the backdrop of falling crude oil prices. The refiner posted a profit of `1,170 crore in the fourth quarter, compared with `1,067 crore in the corresponding period in 2013-14. The crude oil price of the Indian energy basket last fiscal was $84.16 per barrel, as against $105.52 in 2013-14.
Source: Mint, 23 May 2015
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