Now Any Private Company Can Open A Petrol Pump: Here Are The Terms & Conditions You Should Know

Now Any Private Company Can Open A Petrol Pump: Here Are The Terms & Conditions You Should Know
Now Any Private Company Can Open A Petrol Pump: Here Are The Terms & Conditions You Should Know

On Wednesday, the government has opened the fuel retailing norms which will allow non-oil companies to set up petrol pumps.

They came to this decision in bid of increasing competition in the oil market segment.

Why Would They Take This Decision?

While giving more information about the decision, the Cabinet, I&B Minister Prakash Javadekar said that this decision of opening up the fuel retailing will increase investment and competition.

Currently, a company has to invest ?2,000 crore in either hydrocarbon exploration and production, refining, pipelines or liquefied natural gas (LNG) terminals to acquire a fuel retail licence in India.

he said “The Cabinet Committee on Economic Affairs (CCEA) has approved review of guidelines for giving authorisation for the marketing of transportation fuel,”.

What Does This Latest Fuel Retailing Norms Says?

According to these new norms, Companies with ?250 crore turnover can enter fuel retailing, subject to condition that 5% of the outlets will be in rural areas. petrol, diesel, LNG and CNG are the fuels under this deliberation.

The cabinet’s panel on economic affairs under Kirit Parikh also have applied two conditions for new entrance.

These conditions are basically to ensure alternate or cleaner mobility solutions.

  1. The new entrance will have to offer at least one of the three alternatives to petrol and diesel-electric vehicle charging facility, CNG (compressed natural gas) or LNG (liquefied natural gas) for heavy vehicles – at their retail outlets within three years of becoming operational.
  2. Apart from this, they have to set up 5% of its total outlets in rural areas within five years of starting the business.

How Would It Affect The Market?

It is said that this is the biggest fuel market reforms since 2002, when under Atal Bihari Vajpayee, the NDA-1 government had deregulated the oil pricing for some time.

This step will assure foreign investors about Prime Minister Modi’s government’s commitment to market-driven economy.

At the same time, it will also assist in government’s plan to hive off India’s second- and third-largest fuel retailers – BPCL and HPCL.

Are There Any Private Companies Already Working In This Segment?

At present Bharat Petroleum Corp Ltd (BPCL), Indian Oil Corp (IOC) and Hindustan Petroleum Corp Ltd (HPCL) are the state-owned oil marketing companies which own over 65,000 petrol pumps in the country.

Some private players like Reliance Industries, Nayara Energy formerly known as Essar Oil and Royal Dutch Shell already present although they hold limited presence in the market. 

The world’s largest oil refining complex running company Reliance, Presently owns around 1,400 outlets in India.

What Should We Hope From This Change?

The companies pursuing authorisation to market petrol and diesel can now apply for retail and bulk sales, or both.

They also have been provided with the flexibility to acquire marketing authorisation through joint ventures or subsidiaries.

The experts are hoping for private investment to flow into creating a business

category of underwriting supplies for standalone or a chain of petrol pumps as seen in Europe or US markets.

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