Jio-BP to give monthly rent to dealers, slash diesel supply to 10%

Mumbai: and BP Plc led fuel retail venture Jio-BP is working out a compensation plan for dealers wherein the company will support the dealers through a monthly rental scheme for the next four months, beginning 1 June, according to nearly half a dozen dealers ET spoke to.

Jio-BP operates 1400 fuel retail outlets. The company has also decided to slash diesel supply to 10% from the earlier 50%, the dealers said.

“We have been informed that the company will give us monthly rent for the next four months as part of the support scheme. We would get 10% of diesel supply of the average sales of October, November and December 2021,” said a dealer who spoke on the condition of anonymity, adding that company officials said this is to avoid shutting down of the retail outlets as had happened in 2008.

The dealers added that the company is working out separate plans for dealer outlets across its three formats – coco (company-owned-company-operated), dodo (dealer-owned-dealer-operated) and codo (company-owned-dealer-operated).

After four months,

may revise the scheme to do away with it depending on how the situation pans out, the dealers said.

RIL and Jio-bp did not reply to an email sent till press time. However, industry sources said Jio-BP is losing ₹17.3 a litre on sale of petrol and ₹24.5 a litre on sale of diesel. Since February 2022, the company has lost ₹1,500 crore in fuel retailing as pump prices are not being revised in tandem with international crude prices. Starting this week, Jio-BP outlets will be selling both, petrol and diesel, at a premium of ₹3 per litre. However, even at these revised prices the company would be incurring losses, sources said.

On March 16, Jio-BP nearly halved fuel supply to its dealers owing to losses of Rs 10-12 per litre daily on sale of diesel. The company has not resumed complete fuel supply till date. The per litre losses have however, increased to nearly ₹20 a litre as oil marketing companies have not hiked fuel prices since 6 April. On Tuesday Brent crude was trading around $119.07 per barrel.

Gross refining margin for RIL touched a 20-year high of $17 per barrel, said Morgan Stanley on 6 June, adding that RIL’s energy vertical is on track to deliver its best quarterly performance in over 20 years and petrochemicals margin is up on a quarter-on-quarter (QoQ) basis.