Within days of a major rollout of city gas distribution networks, state-owned oil marketing companies (OMC) have announced plans to double the number of retail fuel pump outlets across the country. As the country moves closer to next year’s general elections, perhaps the government wants to prod economic activity on the ground through these measures.
Sunday saw a nationwide publicity campaign on the launch of around 55,649 petrol pump dealership across India — a massive effort that comes four years after the last round of petrol pump expansion undertaken by the three OMCs: Bharat Petroleum Corporation Ltd. (BPCL), Indian Oil Corporation Ltd. (IOCL), and Hindustan Petroleum Corporation Ltd. (HPCL).
Currently, there are around 62,585 retail petrol pumps in India and the majority of them are under the three state-owned firms, while private sector companies including Reliance and Nyara Energy have around 6,000. Existing private sector players, including multinational companies like Shell have been trying expand their retail presence in India, while those like BP have been trying to get a foothold.
Transportation fuels like petrol and diesel, meanwhile, are growing at 8 and 4 per cent respectively and officials say that this kind of growth in a growing economy necessitates new fuel stations.
Commenting on the unprecedented number of dealerships being thrown open, Shubhankar Sen, general manager, BPCL and one of the OMC co-ordinators for Maharashtra region said, “the kind of development of highways, we had not seen that kind of expansion decades ago, mobility is a big growth”.
“The retail outlet network in rural, remote and far-flung areas are also being expanded with the intention of reaching product, predominantly HSD (high speed diesel), ensuring quality and correct price to meet the rural agricultural demand and people living in remote areas,” a release from the oil firms said.
For the first time, dealer selection has been brought under one simplified online process and all physical documents at the point of application have been eliminated. Drawing of lots will also be done electronically by an independent agency to ensure transparency.
Though a large number of dealerships have been advertised for, actual materialisation — the number of pumps that would ultimately be commissioned — would be just around 17 per cent, OMCs said. A large format petrol pump would need an investment of around Rs 6 to Rs 8 crore, Sen pointed out. OMCs also refuted dealer allegations that per pump throughput has gone down, saying that this figure has actually grown over five years to an average of 170 kilolitre.
“This looks more like an attempt to be there on all important areas, and pre-empt other players. From the retailer’s point, for PSUs, per pump productivity was low. Pay-back time is going to be longer for these new pumps,” said K Ravichandran, senior vice president, ICRA, adding that retailers profitability
is a concern.
The petroleum ministry is also in the process of changing guidelines for retail marketing of transportation fuel, having already set up a committee under Kirit Parikh, a renowned economist. This is expected to liberalise the marketing scenario and spur competition, with the ministry having allowed door step delivery of fuel a while ago.
Announcements for poll-bound states later
Sunday’s announcement calling for dealership applications, however, does not include the states that are going to polls soon, PTI reported. Advertisements for these five states are to be issued after the assembly elections are over.
