FUEL PRICE TO CHANGE DAILY FROM AUG.

The revision of petrol and diesel prices on a daily basis is expected to come into force in Hyderabad from August. The revision of prices will be launched in five cities from May 1. Only Vizag from the Telugu states figures on the list of cities for the pilot project.

The revision of fuel prices on a daily basis is expected to come into force in Hyderabad from August. Oil marketing companies have reportedly indicated this to petroleum dealers.

The firms are set to launch daily revision of fuel prices from May 1 in five cities on a pilot basis and later extend the same to the entire country.

Only Vizag figures from the Telugu states on the list of cities selected for the pilot project. The second phase is expected to be launched in August wherein the new system of daily revision of fuel prices will be extended to a other cities, including Hyderabad.

There are over 500 petrol pumps in the city and on the outskirts, which are expected to be covered under the second phase.

However, city petroleum dealers sought six months’ time to implement daily revision of fuel prices, saying there was still a gap of nearly 40 per cent in automation of fuel dispensing machines. This is a pre-requisite for daily revision.

Rajiv Amaram, president of Telangana Petroleum Dealers' Association, said: “Only 60 per cent of fuel-dispensing machines are automated. The automation of all petrol pumps is required to implement daily revision of fuel prices. It requires a lot of investment for automation. It will be difficult for all dealers to go for automation within threefour months.”

Mr. Amaram said each dealer would have to invest up to Rs 40 lakh for automation and it would be difficult to mobilise such a huge investment within a short time.

The automation of petrol pumps in other parts of Telangana will be tougher. For fewer than 40 per cent of fuel-dispensing machines in districts are automated. There are over 1,500 pumps in districts, of which about 550 are automated.

Revised rates will automatically be updated in all petrol pumps from the oil companies’ headquarters in Mumbai in automated dispensing machines. The proposal by RBI to tighten the regulations for asset reconstruction companies (ARCs) by prescribing a higher netowned fund is expected to trigger consolidation in the industry.

The RBI has proposed to increase the net-owned funds of ARCs from `2 crore to `100 crore. This according to Crisil will attract players with deep pockets, enhance transparency in transactions, improve loan recoveries and open up scope for consolidation.

There is a total of 23 ARC’s operating in India and with top five players accounting for 90 per cent of the total assets under management.

Given the thicket of rule changes, Crisil noted that larger ARCs would be on a firmer footing, especially those backed by strong promoter groups with the ability and intent to infuse capital, and relatively better capability to attract capital from external sources, given that 100 per cent FDI is permitted in the sector.

The ability and intent of smaller ARCs to infuse capital would potentially be a catalyst for consolidation.

“With the tightening of norms, we believe the market share of top five ARCs would consolidate further and smaller ARCs may merge with larger rivals or they could become takeover targets for large private equity investors and stressed asset funds wishing to enter the business,” said Krishnan Sitaraman, senior director, Crisil Ratings.