Reliance petrol dealers want their money back

Vol 13, PW 18 (25 Feb 10) Exploration & Production

Reliance is on a collision course with 130 of its petrol pump dealers in Gujarat who want their money back.

“Our demand to Reliance is very simple,â€‌Sunil Golwala, head of theSaurashtra Kutch Petrol Pump Dealers Association, tells PETROWATCH.“Please cancel our dealership and lease agreements, return our deposits and take away your fuel dispensers, canopies, pipelines, signboards and all other equipment!â€‌Reliance's habitof abruptly closing and re-opening its petrol stations (four times since 2005!), says Golwala, is resulting in mounting losses for dealers in Gujarat, wherepetrol stations fall into one of two categories: Dealer-owned, Dealer-operated (DoDo) or Company-owned, Company-operated (CoCo).

“Reliance is in no position to match the prices offered by state run retailers like HPCL, BPCL or IOC," he adds. “Those companies sell subsidised fuel below cost.

Why is Reliance punishing us by opening and closing our pumps like thisâ€‌Golwala, who owns a petrol pump in Rajkot, says he and other affected dealers have sent Reliance several letters and e-mails and have held two videoconferences with senior Reliance officers in Ahmedabad and Vadodara demanding a return of their deposits, totalling between Rs20 lakh and Rs30 lakh ($43,000-$65,000). But to no avail.

Golwala claims that instead of earning money from his Reliance dealership, he lost Rs3.21 lakh ($7000) between June and December 2009. “Even if a petrol station is kept closed,â€‌ he complains, “the owner loses on average between Rs50,000 ($1100) to Rs1 lakh ($2200) every month because of the overheads." These include electricity bills, security, taxes and other maintenance costs.

Back in 2002 hopes were high when Reliance set up more than 1400 petrol pumps across India spending Rs4000cr ($867m) in anticipation that the government would free petrol and diesel prices. That never happened and most of Reliance's gleaming petrol stations today stand deserted.

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