Nayara, Jio-BP sell fuel on discount; state-run OMCs lose market share

New Delhi: Private fuel retailers are cutting prices and eating into the market share of their public sector peers, passing on the benefit of cheaper Russian crude oil to their customers. While government-owned oil marketing companies (OMCs) that dominate fuel retailing in India have not touched prices since March 2024, Jio-BP and Nayara, which together control 97% of private fuel retail, have cut prices by as much as ₹5 in some regions.

Apart from retail price cuts, private fuel sellers are also offering discounts on bulk purchases of petrol and diesel. Dealers operating pumps of OMCs said that discounts offered by private refiners, in turn, have eroded the market share of Indian Oil Corp. Ltd (IOCL), Hindustan Petroleum Corp. Ltd (HPCL) and Bharat Petroleum Corp. Ltd (BPCL), with private firms emerging as dominant players in several tier-II cites.

“The most impacted states are Gujarat, Maharashtra and Uttar Pradesh. Reliance (Jio-BP) started with a Happy Hour scheme where it provided discounts of up to ₹5 per litre during a certain time period, followed by a similar offer by Nayara. This, however, is restricted to some pockets and retail outlets. So, on an average, the discounts across their retail chain may be around ₹1-2 per litre,” said Nischal Singhania, president of Delhi Petrol Dealers Association (DPDA). Jio-BP had kicked off price cut with a ” ₹3 per litre discount on petrol in October.

Queries sent to Nayara, Reliance Industries, Shell, IndianOil, BPCL and HPCL remained unanswered till press time.

Discounts on fuel

Nayara has joined as well. On Monday, the company, part-owned by Russian oil major Rosneft, announced a discount of up to ₹5 per litre of petrol and diesel in case of purchases worth ₹1,000. “At Nayara Energy, we don’t just fuel your tank; we fill your day with guaranteed savings. Fuel up worth ₹1000 and get up to ₹5 off per litre of petrol and diesel,” it said in an Instagram post.

Singhania added that private companies may be able to offer fuel at discounts due to cheaper crude oil. Indian refiners, both private and public sector companies, have been sourcing cheaper oil from Russia. Both Reliance Industries and Nayara have long-term deals to import Russian oil. According to a Reuters report, Reliance Industries, which operates a mega refinery in Jamnagar, signed a term agreement in December in December for supply of nearly 500,000 barrels of crude per day from Rosneft for a period of 10 years.

“Gujarat is most impacted by the discounts. Reliance and Nayara have their refineries in the state and don’t have to incur high transportation costs to supply fuel to their pumps within the state. The discounts have largely been underway for about six months now, but the impact has been most felt in the past four months, since September,” said Arvind Thakker, president of the Federation of Gujarat Petroleum Dealers’ Association (FGPDA). 

“Pumps of government-owned OMCs are losing significantly in terms of market share, volume sales, profitability and customers. As loyal dealers with strong relationships with PSU oil companies, we are worried,” said Thakker. “It is an alarming situation, which needs to be urgently addressed.” 

In Gujarat’s cities like Ahmedabad and Vadodara, fuel pumps of public sector companies are witnessing severe impact, with customers turning to the pumps of private refiners. State-run IndianOil has the largest network of 2,100 fuel pumps in Gujarat, followed by BPCL, HPCL and Nayara, which have about 1,600 pumps. Jio-BP has 150 retail fuel outlets in the state.

Data from industry sources showed that in Gujarat, during the first six months of the current financial year, public sector OMCs witnessed a 2.4 percentage point fall in petrol market share to 75.1% from 77.5% a year earlier. The market share of private refiners increased 2.4 percentage points to 24.9% this fiscal from 22.5%.

Shrinking share

Similarly, in the case of diesel, while private refiners increased their market share to 23.2% from 20.4% last fiscal, the market share of state-run OMCs shrank by 2.8 percentage points to 76.8% from 79.6% last year.

In the April-December period, retail petrol sales from pumps of private refiners in Gujarat witnessed a growth of 18.5% year-on-year at 720,000 kilo litres from 607,000 kilo litres. In the same period, retail petrol sales from pumps selling oil from public sector refining rose only 3.7% in the state to 2,173,000 kilo litre. On the other hand, diesel sales from PSU fuel pumps fell 2.9% year-on-year, while the private sector witnessed a growth of 14.5%. Retail diesel sales of PSU oil companies during the April-December period stood at 4,296,000 kilo litre and that of private refiners was 1,296,000 kilo litre.

Price cuts are making an impact in Rajasthan, where private fuel retailers have a sizeable presence. Suneet Bagai, former president of the Rajasthan Petroleum Dealers Association, said: “They are becoming dominant players in the areas they operate. Their sales growth is three times of that of pumps of PSUs. Several pumps are witnessing a fall in their fuel sales.”

India has over 90,000 petrol pumps, and public sector companies have the largest chunk of the market. Nayara has the largest retail network among the private companies with about 6,500 pumps, and plans to add 400 more this year. India has three key private refiners — Nayara, Jio-BP and Shell.

Public sector companies have lowered prices only once in the last two years, around ₹2 cut last in March, right ahead of the 2024 Lok Sabha elections. The previous cut came in November 2022, when the government lowered excise duty.

Stagnant prices

Prices have been otherwise stagnant in the past three years, despite the increase in international crude prices to multi-year highs in 2022 amid the Russia-Ukraine war, and the subsequent decline to around $70 per barrel. Currently, Brent crude trades around $77 per barrel, while Russian crude oil is available at a discount of $2.5-4 a barrel, down from a discount of as much as $30 at the outbreak of Ukraine war.

Although private sector still has a small pie of the retail fuelling network in the country, their growth gains significance as India’s petroleum market is seen growing in the years ahead despite a slowdown expected globally. This allows refiners a favourable opportunity as global demand is tapering. According to data from the Petroleum Planning and Analysis Cell, India’s petroleum product demand remains robust, with consumption seen at a record 252.9 million tonnes in FY26. This is 4.65% higher than the 241.8 million tonnes projected for FY25, driven by key transport fuels petrol and diesel. Demand for petrol is projected to grow 6.64% in FY26 to 42.6 million tonnes from 39.98 million tonnes projected for this fiscal. Diesel consumption is projected at 94.12 million tonnes, higher by 2.77% than the 91.57 million tonnes estimated for FY25.