After Reliance Industries Ltd and its partner bp plc of the UK, Nayara Energy - the nation's largest private fuel retailer - has started selling petrol and diesel at Re 1 less than the fuel sold by state-owned retailers, officials said.
While state-owned Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) continue to hold prices despite a drop in international rates, private fuel retailers have started passing on the benefit to consumers.
"To further stimulate domestic consumption and cater to local customers better, we have introduced a Re 1 discount in our retail outlets until the end of June 2023," a spokesperson for Nayara Energy said.
"We believe in being a strong partner to India's energy needs and will continue to serve the country's consumption demand."
Nayara Energy, which owns over 7 per cent of India's 86,925 petrol pumps, is selling petrol and diesel at Re 1 per litre less than that by IOC, BPCL and HPCL in 10 states such as Maharashtra and Rajasthan.
Earlier this month, Jio-bp, the retail fuel joint venture of Reliance and bp, started selling superior grade diesel at Re 1 per litre cheaper than normal or regular grade diesel sold by state-owned companies.
The additive-enhanced diesel helps clean dirt deposits in engines and can improve fuel efficiency.
While Reliance-bp has priced only diesel less than that of PSUs, Nayara is selling both diesel and petrol at rates below state-owned firms'.
IOC, BPCL and HPCL had frozen retail prices when international oil prices climbed in the aftermath of Russia's invasion of Ukraine last year.
While international oil prices have declined, retail prices continue to be on hold for a record 14th month in a row as they recoup the losses suffered last year.
Prices of crude oil, which is turned into fuels like petrol and diesel at refineries, shot above $100 per barrel on concerns of supply disruptions in the aftermath of Russia's invasion of Ukraine in February last year.
While there was no supply disruption, rates continued to remain firm for months thereafter.
To insulate domestic consumers, they stopped daily price revisions from April 6, 2022.
As a result of selling fuel below cost, IOC, BPCL and HPCL posted a combined net loss of Rs 21,201.18 crore during April-September.
During this period, private fuel retailers Reliance BP Mobility Ltd (RBML), Rosneft-backed Nayara Energy and Shell lost market share as they were unable to match the below-cost frozen rates of dominant public sector retailers.
But a fall in international oil prices since March has helped bring their retail prices at par with PSU competition or at market price.
IOC, BPCL and HPCL too have broken even but continue to hold retail prices to recoup past losses.
This has helped IOC and BPCL post profits in 2022-23 (April 2022 to March 2023) fiscal year despite losses in the first half.
Industry sources said Nayara started pricing petrol and diesel at market rates sometime in March and RBML's 1,574 petrol pumps began selling diesel at par from this month.
This month, Jio-bp introduced superior-grade diesel at rates lower than even the normal diesel sold by state-owned firms.
Nayara has followed suit with a similar discount on both petrol and diesel in 10 states.
IOC, BPCL and HPCL first froze petrol and diesel rates for 137 days beginning early November 2021 when five states including Uttar Pradesh went to the polls.
A second round of hiatus began on April 6, 2022, and is continuing.
Nayara Energy owns 6,376 petrol pumps in the country.
IOC, BPCL and HPCL own 78,567 out of 86,925 petrol pumps in the country.