OMCS TO TAKE ON RIL WITH E-DISCOUNTS, CASHBACKS

Indian Oil is offering a cashback of 10%, or up to ~50, for every transaction

Two state-run oil marketing companies are offering discounts on digital transactions at their petrol outlets.

Representatives of the fuel retail industry see it as a sign of competition from the recently announced JioBP venture.

According to a definitive agreement relating to a joint venture (JV) between BP and Reliance Industries (RIL), the JV will be formed in the first half of this year.

“Various oil companies have been offering schemes at their petrol pumps. Most of this is to ensure state-run oil companies do not lose market share to RIL,” said Ajay Bansal, president of the All India Petrol Dealers Association (AIPDA).

According to details given by Indian Oil Corporation (IOC), the fuel retailer has been offering a cash-back of 10 per cent, or up to ~50, per transaction on debit- or credit-card payments. The scheme started on December 1 last year and will be valid up to January 31.

Details available on Hindustan Petroleum Corporation’s (HPCL’S) website suggest there is a digital incentive of 0.75 per cent on all digital transactions except those on the credit card. The discount is given instantly on the bill. A query sent to HPCL remained unanswered.

An executive of the oil industry said the 0.75 per cent incentive on digital payments, introduced after demonetisation in 2017, was discontinued for credit cards in October. The offer continues on other digital modes of payment.

In its December 2019 quarter results presentation, RIL said the company registered 11 per cent growth in volumes for diesel and 15 per cent growth for petrol. The growth outperforms the industry growth rate of 0.2 per cent for diesel and 7.1 per cent for petrol in the same quarter.

Not all state-run companies are toeing the same line. “There is no way we can offer discounts in the range of 10 per cent,” said an executive of Bharat Petroleum Corporation (BPCL).

Petrol-pump dealers agree discounts will be difficult to provide in the current market. “Dealers on their own are not offering any discounts. What are being made available are those given directly by oil companies, who wish to push their products,” said Ravi Shinde, former president of the Mumbai Petrol Dealers’ Association.

As of January, there are 67,440 petrol pumps in the country. IOC is a market leader with 28,597 outlets, followed by HPCL with 16,017, and BPCL’S 15,616. RIL operates 1,400 retail outlets under its planned joint venture, and it looks to expand the network to 5,500 retail sites over the next five years.

Bansal said competition from the second private fuel retailer, Rosneft-owned Nayara Energy, had not been a concern so far for state-run oil companies.

Nayara operates a pan-indian retail network of 5,600 petrol pumps.