Coming on top of an up to Rs 2.92 a litre increase effected by Reliance last month, the latest increase would make diesel and petrol from its retail outlets costlier by more than Rs 2 a litre compared to the rates of PSU retailers. Informed sources said this has led to a decline in sales of auto fuel at RIL outlets, which in effect should help it curtail losses.

Reliance had on May 11 raised petrol price by Rs 2.72 to Rs 2.92 a litre and followed it up with a similar quantum of hike in diesel price on May 22.

Sources said Reliance has maintained the differential of Rs 2.72 to 2.92 in its retail selling price as it was suffering losses on selling fuel below the cost of production.

Though the higher price has cost the company market share, Reliance says unlike public sector oil retailers it is not entitled to government bonds and discounted crude oil to cover for under-recoveries.

Before the hike, Reliance had captured 12.5 per cent market share in diesel and 5.5 per cent share in petrol sales. This market share, particularly in diesel, has slipped by 20 per cent since the time it decided to sell fuel at a price higher than its public sector competitors, sources said.

Reliance has about 1,400 petrol pumps, mostly on highways, which it plans to raise up to 2,500 by the fiscal end.

Shell, the other private sector retailer, raised prices of the two auto fuel sold through its five outlets in the same proportion as public sector retailers.