The Hindu : Front Page : Oil firms may market only branded fuels

Online edition of India's National Newspaper
Wednesday, May 14, 2008
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Oil firms may market only branded fuels

N. Ravi Kumar

CHENNAI: Oil marketing companies such as Indian Oil Corporation are actively considering promoting only the branded, costlier petrol and diesel as a measure to curtail their mounting under-recoveries.

Though a senior official of one of the companies said the growing consumer preference for fuels with multi-functional additives drove the decision, industry sources say it could well be the beginning of the phase out of regular petrol and diesel from some retail outlets.

While an official of Hindustan Petroleum Corporation Ltd said the prospect of hard-selling branded fuels was tempting in the face of galloping crude oil prices, a senior executive of Bharat Petroleum Corporation Ltd said a meeting of the company officials in Mumbai is expected to discuss the issue..

IOC has initiated the process by identifying 1,000 outlets in 20 cities across the country that would be fully converted into branded fuels. This list includes 69 retail outlets in Chennai, of which the conversion is happening in 47, said N.Srikumar, Executive Director (Branding, Corporation Communications and Planning) of the company.

In Chennai, a litre of regular petrol costs Rs.49.61 and diesel Rs.34.40. The price of the branded fuels varies marginally from company to company.

In the case of branded petrol, the additional cost is between Rs.3 to Rs.3.20 a litre, while for branded diesel it hovers around Rs.1.25.

Reducing losses

By selling more branded fuel, the companies hope to reduce under-recoveries. “It is not about making profits, but cutting down out losses,” says Mr.Srikumar. It is this incremental cost that is possibly making other companies move ahead cautiously. According to R. Radhakrishnan, General Manager (South Zone) of HPCL, the decision to have a branded fuel is entirely dependent on customer preference.

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