Govt looks for ways to relax norms for setting up petrol pumps
24 October 2018
The government is weighing plans to relax norms for setting up petrol pumps in order to get private companies like Reliance and Essar to actively engage in fuel retailing as the time is ripe for private push into the fuel retailing business.
The ministry of petroleum and natural gas has set up an expert committee to recommend easing of fuel retailing licensing rules, the ministry order said.
At present, to obtain a fuel retailing licence in India, a company needs to invest Rs2,000 crore in either hydrocarbon exploration and production, refining, pipelines or liquefied natural gas (LNG) terminals.
The expert committee will "look at various issues related to the implementation of existing guidelines for grant of marketing authorisation of market fuels - petrol, diesel and aviation turbine fuel (ATF)," it said.
The panel would have renowned economist Kirit Parikh, former oil secretary G C Chaturvedi, former Indian Oil Corp (IOC) chairman and IIM Ahmedabad Director M A Pathan as members.
The committee has been asked to submit its report within 60 days after due consultations with stakeholders.
The committee will "review the existing architecture and extent of private sector participation in retail marketing of major transportation fuels in the country," the order said.
It will "identity entry barriers, if any, for expansion of retail outlets for private marketing companies."
State-owned oil marketing companies - Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) - currently own most of 63,498 petrol pumps in the country.
Reliance Industries, Nayara Energy - formerly Essar Oil and Royal Dutch Shell are the private players in the market but with limited presence. Reliance, which operates the world's largest oil refining complex, has less than 1,400 outlets.
Nayara has 4,833 while Shell has just 114 pumps.
BP plc of UK had a couple of years back secured a licence to set up 3,500 pumps but hasn't yet started doing so. Last week, French energy giant Total in a joint venture with Adani Group announced plans to set up 1,500 petrol pumps in the next 10 years.
IOC is the market leader with 27,325 petrol pumps in the country, followed by HPCL with 15,255 outlets and BPCL at 14,565 fuel stations.
The expert committee will "assess the need, if any, to further liberalise the existing guidelines for authorisation of private sector marketing companies," the order said.
The expert group would make specific recommendations on the nature of amendments required to the existing guidelines for grant of a license to private retailers.
Currently, the three oil marketing companies are following the same methodology for fixing retail prices, which on almost all occasions are in sync with one another and prices vary by just a few paise.