October 17, 2008

Essar Restarts Operations at Mothballed Indian Petrol Stations

Indian oil refiner and fuel retailer Essar has said that it will be restarting its indefinitely-shutdown petrol stations across India as crude oil prices have dropped below $70 per barrel.

Essar had begun restarting approximately 1,250 petrol bunks in the country in August 2008, and has already made around 300-350 outlets operational, mostly in the southern and western parts of India.

The company had suspended operations at its retail fuel outlets beginning in April 2007 due to heavy losses caused by government subsidized pricing for the state-owned oil companies, which control a majority of the market.

While the government extended support to the state-owned companies by partly compensating them for losses due to subsidies, private companies like Essar and Reliance have not received any such aid.

Essar has been selling a liter of petrol at up to INR5 higher and a liter of diesel at up to INR10 higher than the state-owned companies.