New Delhi, Mar 26: Government is in a fix over closure of petrol pumps by Reliance Industries over denial of subsidy on par with public sector companies, with Oil Minister Murli Deora on Wednesday admitting that dealing with the situation was not easy.

"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 plans to shut two-third 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.

He, however, said no one had approached him demanding subsidy.

Reliance and Essar make 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 PSU pumps.

Public sector retailers too 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 ONGC, GAIL and Oil India. The same compensation is not given to the private retailers like Reliance and Essar.

Reliance still 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 per cent in diesel.

Reliance spokesperson was not immediately available for comments.