New Delhi, Mar 26: on Wednesday admitted that Reliance Industries decision to close its petrol pumps has put the Government in a fix.

"You don't expect the Government to give subsidy to (private retailers like) Reliance and Essar (oil). But you also cannot expect them to be penalised," he told reporters here.

Reliance said it plans to shut two-thirds of its 1,400 petrol pumps in the country by next month, as it is unable to match the fuel price offered by state-run retailers, who get compensated by the Government for selling fuel below the cost.

"Its a big problem," Deora said indicating that the Government had no ready solution to deal with the situation.

But he also added that no one had approached him demanding subsidy.

Reportedly, Reliance and Essar have huge losses on selling petrol and diesel at prices higher than Indian Oil, Bharat Petroleum and Hindustan Petroleum. On an average, fuel at private outlets is costlier by Rs 4 to 5 a litre than the Public Sector Undertakings (PSU) pumps.

Public sector retailers also lose Rs 10.93 on sale of every litre of petrol and Rs 14.66 per litre on diesel but the losses are made up by issue of oil bonds by the Government and discounts from Oil and Natural Gas Corporation (ONGC), Gail and Oil India. The same compensation is not given to the private retailers like Reliance and Essar.

Reliance lost close to Rs 5 a litre on petrol and about Rs 8 a litre on diesel and had seen its market share fall from 14.3 per cent to less than a percent in diesel. (ANI)