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India’s private fuel retailers uncertain over expansion

High crude oil prices and continued regulation of diesel fuel prices are keeping India’s private fuel retailers from expanding their retail outlets. When the government of India lifted restrictions on gasoline prices in June of 2010, private fuel retailers moved to reopen their fuel retail outlets, but recent increases in the price of crude oil and the continued government regulation of diesel fuel have slowed expansion. Private enterprises, such as Reliance Industries Ltd., Essar Oil Ltd. and Royal Dutch Shell, are finding it hard to compete with state-run oil retailers who can sell fuel at government-subsidized prices, particularly diesel fuel. Reliance industries had reopened approximately 700 retail outlets, but it is unclear if any more outlets will be reopened. Essar Oil had expected to have 1,700 retail outlets operational by March 2011, but according to its Managing Director, Naresh Nayyar, “Due to the sudden rise in oil prices and the slowdown in the deregulation process, we are now reviewing our plans. At this stage, we are not aggressively pursuing the expansion of our retail network further.” (March 23, 2011)