Reliance Industries and Essar Oil, India's two privately owned motor fuel retailers, are responding to the slump in sales due to demonetisation and the recent 0.75 per cent discount for cashless payment at public sector oil marketing companies (OMCs) outlets.
Reliance is offering a flat discount of Re 1 /litre, irrespective of the mode of payment. Essar is also giving a 0.75 per cent discount on digital/card payments.
"RIL's discount was started around two weeks earlier. Some market share was lost for a temporary period, as the public sector-run pumps were accepting the old Rs 500 and Rs 1,000 notes but the private ones were not allowed to," said a source.
Bharat Petroleum Corporation, Hindustan Petroleum Corporation and Indian Oil Corporation Ltd are the three government OMCs. To incentivise digital payment methods, the government announced 0.75 per cent discounts on e-payments at public sector fuel outlets from December 13. "How long RIL will continue with these discounts will be decided by the market dynamics," added the source.
India is currently one of the fastest growing markets in retail fuel. The government OMC outlets are considering whether to experiment with dynamic fuel pricing. RIL and Essar have not done this till now.. Dynamic pricing would mean a fuel retailer offering different prices at different outlets, depending on the proximity to infrastructure, demand and supply dynamics, and other factors.
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