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Viva will also pay Coles $137 million under the deal.

Underscoring the need for change in the business, Coles released a trading update on Wednesday showing that average fuel sale volumes in the first half of this financial year were down to 62 million litres a week, compared with 74 million a week last year.

It forecast earnings from the Coles Express business would fall from $164 million last year to $50 million this year, which equates to a drop in earnings of about 7 per cent within the Coles business as a whole.

Coles Express chief executive Alister Jordan said that having each side of the partnership focusing on their speciality would make them more competitive.

“It allows us to rebuild the Coles Express business with Viva, where both sides are highly aligned and incentivised to grow the overall alliance,” Mr Jordan said.

Viva Energy chief executive Scott Wyatt said by shifting the control of the pump from Coles back to Viva the fuel price would likely drop.

“Historically, Coles set the retail pump price but we felt in order to grow our business we had to have control over how the pump price is set,” Mr Wyatt said.

“Part of this deal is focusing on improving our fuel offer and improving the competitiveness of pricing.”

He said the company was aiming at a modest increase in fuel sales, rising from the average of 64.2 million litres a week sold last year to between 70 and 75 million litres a week.

“This is a very significant milestone for the company,” Mr Wyatt said.

“We’ve taken the opportunity to reset the relationship and recognise things have changed.”

Loyalty scheme benefits such as earning Flybuys points on fuel sales and the 4¢ a litre shopper docket discount would continue, Coles said.

Viva’s shares rose 13.7 per cent to $2.19, while Coles, which was spun-off from Wesfarmers in November, fell 2.5 per cent to $12.40.