Media reports indicate that private fuel retailers like Essar Oil, Reliance Industries (RIL) prefer to export diesel instead of selling them in the domestic market despite the government partially de-regulating the pricing regime.
This is because these firms fear that the government may again impose price control on diesel during election period.
Some private oil marketing firms informed that exporting diesel gives a better margin and they do not want to stop overseas sales unless they are sure about the future of the domestic market.
Even though the difference between the market rate of diesel and the subsidised price has declined considerably, private retailers say their domestic sale of diesel is negligible because it is still not viable.
Essar is the only private fuel retailer in India, which has been able to keep all its 1,400 petrol pumps operational because of it unique business model that ensures 12.5 percent return on investments to dealers irrespective of sales.
Owing to unsustainable fuel pricing policy of the government, the other two private retailers, Reliance and Shell, have closed several outlets.
Private firms want to compete with state oil companies only after diesel is fully deregulated. With polls in many states scheduled this year and general elections due next year, they are keenly watching how the political leadership handles the issue of diesel pricing.