New petrol pump norms: licensees to set up a minimum 100 outlets with at least 5% in remote areas
India’s new liberalised petrol pump norms require licensees to set up a minimum of 100 outlets with at least 5 per cent of them in remote areas.
According to a gazette notification detailing the norms for setting up petrol pumps, the licensee would also be required to “install facilities for marketing at least one new generation alternate fuels like compressed natural gas (CNG), biofuels, liquefied natural gas, electric vehicle charging points etc at their proposed retail outlets within three years of operationalisation of the said outlet.”
The government had last month relaxed norms for setting up petrol pumps, allowing non-oil companies to market fuel in the world’s fastest growing market.
Prior to this change, to obtain a fuel retailing licence in India, a company needed to invest Rs 2,000 crore in either hydrocarbon exploration and production, refining, pipelines or liquefied natural gas (LNG) terminals.
“Any entity seeking authorisation for retail marketing only should have a minimum net worth of at least Rs 250 crore at the time of making the application to the central government,” the notification said.
It fixed the application fee at Rs 25 lakh.
“The entity needs to set up at least 100 retail outlets, out of which at least 5 per cent of the proposed retail outlets shall be set up in the notified remote areas within five years of the grant of authorisation,” it said.
The applicant will have to state in the application the source of supply of products, tankage and other infrastructure with capacity, means of transportation of products and year-wise number of petrol pumps proposed.
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.
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.
Total in partnership with Adani Group had in November 2018 applied for a licence 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.
While Puma Energy had applied for a retail licence, Aramco was in talks to enter the sector.
State-owned oil marketing companies — Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) — currently own most of the 66,408 petrol pumps in the country.
Reliance Industries, Nayara Energy (formerly Essar Oil) and Royal Dutch Shell are the private players in the market but with limited presence. Reliance, which operates the world’s largest oil refining complex, has less than 1,400 outlets.
Nayara has 5,453 while Shell has just 167 pumps.
BP had a couple of years back secured a licence to set up 3,500 pumps but has not yet started doing so. It is now venturing into the business with Reliance with plans to scale up Reliance’s present network strength to 5,500.
Failing to set up a minimum of 5 per cent of petrol pumps in identified remote areas would attract a penalty of Rs 3 crore per pump. But the firms can at their choice deposit Rs 2 crore per remote area pump at the time of licensing to get an exemption from the clause, the notification said.
Currently, IOC is the market leader with 28,237 petrol pumps in the country, followed by HPCL with 15,855 outlets, and BPCL with 15,289 fuel stations.