Non-oil companies can now set up petrol pumps
NEW DELHI: In the most significant reform in fuel retailing sector in almost two decades, the government on Wednesday relaxed norms for setting up petrol pumps, allowing non-oil companies to venture into the business - a move that could help private and foreign firms to enter the world’s fastest-growing market.
At present, to obtain a fuel retailing license in India, a company needs to invest Rs 2,000 crore in either hydrocarbon exploration and production, refining, pipelines or liquefied natural gas (LNG) terminals.
Companies with a net worth of Rs 250 crore will be allowed to sell petrol and diesel subject to condition that they install facilities for marketing of at least one new generation alternate fuel such as CNG, LNG, biofuels or electric vehicle charging within three years of start of operations, Information and Broadcasting Minister Prakash Javadekar said here.
The retailers will necessarily have to set up 5 per cent of the total outlets in rural areas within five years; he said while briefing reporters on the decision taken by the Cabinet Committee on Economic Affairs (CCEA) headed by Prime Minister Narendra Modi.
“The new policy will bring in more investment and give a fillip to ‘Ease of Doing Business’. It will boost direct and indirect employment in the sector. Setting up of more retail outlets (ROS) will result in better competition and better services for consumers,” he said.
The move will facilitate entry of global giants such as Total SA of France, Saudi Arabia’s Aramco, BP Plc of UK and Trafigura’s downstream arm Puma Energy.
The government had last set fuel marketing conditions in 2002, and the review now is based on the recommendation of a high-level expert committee.
Total in partnership with Adani Group had in November 2018 applied for a license to retail petrol and diesel through 1,500 outlets. BP too has formed a partnership with Reliance Industries to set up petrol pumps but is yet to make a formal application.
Out of the 65,554 petrol pumps in the country, State-owned oil marketing companies - Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) - currently, own around 57,000. These PSU oil majors have recently floated tenders to allot 50,000 new pumps to new bidders.