Petrol pump owners not keen on more outlets

They fear that their sales volume may come down drastically if 65,000 new petrol pumps are set up.

Existing petrol pump owners are opposing Centre’s recent move to allot about 65,000 petrol pumps across the country over the next five years, which will almost double its existing network. Their opposition is primarily because of the fear that their sales volume may come down drastically if new pumps are opened. Last week, the public sector oil companies decided to allot about 65,000 petrol pumps across the country which will almost double the existing retail network. The Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) issued advertisements for setting up 55,649 petrol pumps across the country. This, however, does not include any sites in Madhya Pradesh, Rajasthan, Chhattisgarh, Telangana and Mizoram where Assembly elections are underway.

The present petrol dealers are resisting the move as they are worried that there will be cut-throat competition if new pumps are opened in such a large scale and their sales will dip sharply. “There is no fuel shortage while sales volume is less. The annual growth in sales is just 4%. In such a situation, there is no logic to double the number of petrol pumps. We can understand if new pumps are opened along new highways but opening them where there are already sufficient pumps makes no sense,” said Ajay Bansal, president of All India Petrol Dealers Association (AIPDA).

They claimed that about 80% of the total retail outlets are already under severe stress due to low sales, which adds to their financial losses and debt burden. According to a government committee, a petrol pump is viable only if it sells a minimum of 1.70 lakh litre of fuel every month. And most of the petrol pumps are selling only this amount of fuel per month and therefore, these are somehow remaining viable, they argue.

Bansal also said the government’s decision is contrary to its own policy. “The Centre has announced closure of petrol pumps replacing them with alternative fuels like electricity, CNG and bio-fuels by 2025. But they have now published advertisements for allotting new petrol pumps,” he wondered.

At present, India has 63,674 petrol pumps, most of which are with the public sector companies. Nayara Energy Ltd, formerly known as Essar Oil Ltd, has the highest number of outlets in the private sector at 4,895, while Reliance Industries has 1,400 pumps. Royal Dutch/Shell has 116 outlets.

The dealers also feel that with the proposed doubling of retail outlets, the average sales volume of both the existing as well as new dealers would fall, which will be a bad situation for both.

This is the first time in almost four years that the allotment of petrol pump sites is being advertised. The allotments will be done on relaxed guidelines which have lowered the educational qualification to 10th pass from 12th pass and graduate currently and the only essential requirement is ownership of the land where the pump is to be set up.

IOC, which already has 27,377 petrol pumps across the country, has advertised for setting up 26,982 more in states which are not going to polls. BPCL will add 15,802 outlets to its existing strength of 14,592, while HPCL would add 12,865 to its existing tally of 15,287. Delhi has 390 petrol pumps, while 170 more are to be set up as per the decision.

The expansion, according to official sources, is being undertaken to meet growing fuel needs and for the convenience of customers in emerging markets, like upcoming highways, agricultural pockets and industrial hubs. The retail outlet network in rural, remote areas is also being expanded with the aim of increasing availability of oil products.