HOME > BUSINESS > DIESEL PRICE CUT: After Airtel & Idea, Reliance to target IOCL, HPCL, BPCL?

DIESEL PRICE CUT: After Airtel & Idea, Reliance to target IOCL, HPCL, BPCL?

Reliance Industries, which started giving a discount of Re 1 on every liter of diesel sold through its pumps in January, has now started advertising the offer in Kerala. The discount was first noticed in January in North and West Indian towns.

The move was, at the time, not taken very seriously by players such as Indian Oil Corporation and Hindustan Petroleum Corporation, who felt that it was a response to the discounts offered by state-owned companies to promote electronic payment.

In the aftermath of demonetization, state-owned players including Bharat Petroleum Corporation, had started giving a 0.75% discount when customers paid electronically. That translates to a saving of about 45 paise per liter, and that too in the form of a cash back at a later date.

However, Reliance Industries is offering an instant discount of Re 1 at the pump with no terms and conditions or limits. But the expansion of the offer could pose concerns for the incumbents.

TIME TO WORRY?

The move could set the cat among the pigeons of Indian petroleum retailing business and Reliance could disrupt the fuel retailing market like it disrupted the telecom market.

The state-owned companies, BPCL, IOCL and HPCL, control over 90% of the petrol and diesel retail sales in India.

To prevent competition amongst themselves, they also have identical prices.

This ensures that their profit margins are not hit by competitive pressures, and consumers often choose their pumps purely by looking at the quality of fuel they get.

This is very similar to the Indian telecom market before the entry of Reliance Jio into it.

There were three players — Bharti Airtel, Idea Cellular and Vodafone — and their tariffs, especially for data — was very similar. As a result, consumers chose their provider on non-tariff factors such network coverage and advertising and there was no price-based competition.

MALPRACTICES

Due to the monopolistic nature of the existing petroleum retailing market in India and the high costs of setting up petrol pumps, the sector has seen the rise of malpractices such as adulteration of fuel and rigging of pump equipment.

Moreover, the public sector companies charge a profit margin of around Rs 2 per liter, irrespective of market conditions.

Reliance Industries, which has its own sources of petrol and diesel and is not dependent on state-owned oil companies, is trying to bring forces of competition by cutting the price of fuel.

Even though the price cut is not as high as in telecom — where Reliance Jio’s prices were about 80% cheaper that those of rivals — in petrol and diesel retailing, even a 1.7% cut in price can result in a huge saving.

Many lorry and bus operators, for example, spend lakhs of rupees on fuel per day and a 1-rupee discount can save them thousands of rupees each day.

It remains to be seen how Indian Oil, Bharat Petroleum and Hindustan Petroleum react to the move by Reliance. Reliance owns only around 1,100 pumps, and many of its pumps are non-operational, but each pump can serve a huge customer base, especially those situated on highways and in busy junctions.

Follow ULTRA.news
Petrol, LPG consumption up 10% in India; diesel, kerosene sees sluggishness The pace of growth in petroleum consumption slowed this year, but private retailers are getting ready to open more and more outlets, Fitch Ratings said.Consumption of petroleum products, such as diesel, petrol, LPG and kerosene, has been increasing at a rate of about 5% in I...
TRAI to hear the public on net neutrality in open house this month The Telecom Regulatory Authority of India has started registrations for an open house discussion on its upcoming recommendations on net neutrality.The open house discussion will be held on Wednesday, August 30 at 9:30 AM in New Delhi. The venue has not been finalized yet, and...
Reliance Jio offers phone for ‘free’, unlimited voice, data at Rs 153 Reliance Jio chairman Mukesh Ambani announced the JioPhone, which aims to bring smartphone features to the candybar form factor.The phone will be given to anyone if they deposit Rs 1500 with the company. The user will get the Rs 1500 back when the device is returned after 36 ...
HPCL appoints bankers for Rs 6,000 cr FCCB issue Hindustan Petroleum Corp Ltd said it had appointed banking intermediaries for organizing investor meetings in the run up to raising Rs 6,000 cr ($930 mln) by selling foreign-currency denominated bonds.The bonds will be non-convertible, and will be issued if the meetings disco...
Reliance Industries expands paraxylene capacity, becomes global No.1 Reliance Industries said it commissioned its third and last crystallization train at its paraxylene complex at Jamnagar, making the company the biggest manufacturer of the key ingredient used in plastic production.Paraxylene is used to make intermediate chemicals that are t...
Reliance Jio to start trial services for fiber soon across India Reliance Jio, the biggest carrier of wireless data in the world, said it will expand beta trials of its fiber-to-the-home services in the 'next few months' across India.It has already started these trials in "a few locations", which would be expanded city by city. According t...
Why Reliance Jio will keep data prices low for 2 years: Credit Suisse explains Wireless data prices in India, which crashed from Rs 250 per GB to about Rs 10 per GB after the entry of Reliance Jio, will continue to remain under pressure for at least two more years, said analyst firm Credit Suisse.That is the minimum amount of time that the new entrant w...
Net Neutrality: Vodafone wants right to manipulate Internet videos Telcos want to be able to reduce video qualityVodafone India said it would like to be given the power to manage the size of videos watched by users on its mobile network and lower it automatically "for overall quality welfare".Participating in the discussions related to ...
Reliance Jio could replace Summer Surprise with new offer after TRAI order Reliance Jio's withdrawal of its Summer Surprise Offer is unlikely to make any difference to most of its customers, and the company may even come up with a new version of the plan to comply with the ban."The Telecom Regulatory Authority of India (TRAI) has advised Jio to with...
New TRAI rules to hit Zee Entertaiment, Star, Sony and Sun TV The regulator's new rules on the pricing of television channels in India, which will come into effect in six months, will reduce the clout of big broadcasting companies such as Zee Entertainment Enterprises, Sony, Star India and Sun TV, while encouraging smaller media owners....
Investors starting to understand Mukesh Ambani’s telecom game – Angel Broking Investors are only now starting to realize the plan that Mukesh Ambani and his telecom brainchild, Reliance Jio, have put into practice, and are therefore driving stock prices of his company higher, said Angel Broking, a retail-only stock-broker.Reliance Industries share pric...
India Oil, BPCL, HPCL merger will reduce wastage of resources- Fitch A proposed merger of Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp will reduce inefficiencies across the sector and result in enormous savings, ratings agency Fitch said.It would also create an entity that is better placed to compete globally for resourc...
Explosion at BPCL refinery in Kochi There has been an explosion at the oil refinery in Kochi, operated by Bharat Petroleum Corporation Ltd.The explosion happened at the electricity generation plant at the refinery. The power plant works on gas and was undergoing maintenance.The BPCL refinery is crucial to t...
IOC, BPCL to set up three bio-ethanol plants with Praj Industries Praj Industries said it had entered into agreements with Indian Oil Corporation and Bharat Petroleum Corporation Ltd to set up bio-ethanol plants that will convert agricultural waste into fuel.A total of three plants will be construct -- two for IOCL and the remaining one for...
No cash? Now pay for your gas cylinder via Freecharge Wallet provider Freecharge, one of the first to support the new UPI platform, has now tied up with Indian Oil to let customers make payments for gas deliveries via a PIN number.Once the pin number is provided to the gas delivery boy, the amount will be deducted from your Free...
Anil Ambani’s Reliance Defence and Engineering to enter the oil rig business Reliance Anil Ambani Group said its unit Reliance Defence and Engineering Ltd partnered with US-based oil rig comopany ALLRIG to provide jack-up rigs, drilling rigs and other floating fixed oil & gas assets in India."The association will be helpful in providing solutions ...
India to acquire stake in Russian oil fields, to invest US $3.2 billion Indian government approved the acquisition of stakes in two Russian oil fields for US $3.2 billion.A consortium of Oil India Limited, Indian Oil Corporation Limited and Bharat Petro Resources Limited (BPRL) will acquire 23.9 percent stake in JSC Vankorneft and 29.9 percent st...
HPCL, Aditya Birla Fashion to start accepting ICICI Bank’s UPI payments ICICI Bank said it has tied up with Hindustan Petroleum Corporation Ltd and Aditya Birla Fashion and Retail Limited to offer UPI based payments their retail outlets.The bank also said it has become the first in India to have 1 lakh registered virtual payment addresses under t...
Reliance Jio says Vodafone’s increase in PoI inadequate Reliance Jio Infocomm said the number of new interconnection points being put in place by Vodafone at its network junctions is "substantially less than the requirement".Jio was responding to the announcement yesterday that India's No.3 telecom company will increase interconne...
Users face problems getting Reliance Jio OTP on some rival networks People trying to sign up for a new connection with Reliance Jio are facing problems receiving one-time passwords on certain rival networks, according to complaints on social media.Buying a new connection on Reliance Jio involves generating a one-time password in certain cases...
Reliance Industries unit takes $330 mln overseas loan Reliance Industries said its subsidiary Reliance Sibur Elastomers Pvt Ltd. has agreed to take a loan of $330 million, roughly equal to Rs 2193 crore, from overseas lenders."The Facility with door to door tenor of 10 years shall be utilized to part finance the Capital expendit...
FULL TEXT: Mukesh Ambani’s speech on Reliance Jio launch and features The following is the full text of RIL Chairman Mukesh Ambani's speech delivered today at Reliance Industries' annual general meeting in Mumbai.Dear Shareholders,I start with the newest and youngest member of the Reliance family – Jio. Let me begin my words with a ded...
Mukesh Ambani calls on rivals to compete fairly As expected, Mukesh Ambani, chairman of Reliance Industries called on rivals like Bharti Airtel, Vodafone and Idea to compete fairly with the company and provide voice interconnection points.Ambani said Jio customers have suffered 5 cr call failures in the last one week d...
WATCH LIVE: Mukesh Ambani at Reliance Industries AGM to unveil Jio plans and tariff details Taking a cue from other consumer-facing brands, Reliance Industries has decided to provide live streaming of Mukesh Ambani's much expected speech at the company's annual general meeting on Thursday.NOTE:THIS IS FROM SEPTEMBER. GO TO THIS PAGE FOR TODAY'S SPEECHThe liv...
ACC, Ambuja among cement companies facing massive fines from Competition Commission The Competition Commission of India (CCI) has imposed fine of Rs 6,320.6 cr upon ten cement manufacturers for forming independent organization to limit competition by controlling the production and distribution of cement, said the Ministry of corporate affairs.The list of...