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At a time when private oil companies like Rosneft-led Nayara Energy, Reliance-BP, and Shell are expanding their network, the government has signalled that state-run oil companies will add 25,000 new petrol pumps. This is nearly half as many operational today.
Also, fuel retailers like Indian Oil, Hindustan Petroleum and Bharat Petroleum will now have the freedom to make their own rules for setting up petrol pumps.
As per a report by the Economic Times, last month, the government had permitted state-run oil companies to design their own rules for appointment of petrol pump dealers since a government guideline was no longer necessary in the wake of deregulation of the sale of petrol and diesel.
The report quoted executives from these companies confirming that they will soon be coming out with advertisements seeking interested dealers at 25,000 locations, primarily in rural and under-served regions.
Currently, these state-run companies operate around 57,000 filling stations while the private players run around 6,000.
While all locations might not attract applicants or eventually have a petrol pump, even a 50 percent response would mean thousands of crores of investment in the fuel retailing business by these companies.
The state-run firms currently control around 90 percent of the fuel business and this move would further increase their dominance while creating jobs for thousands of people.
Earlier, an applicant desiring to open retail outlets in regular locations were required to have at least Rs 25 lakh in bank deposits or other financial instruments. For rural locations, the amount was Rs 12 lakh. There were also some stringent rules on land ownership.
According to the new eligibility guidelines, the fund requirement has been scrapped and people not having land or a concrete tie-up with a land-owner can also apply for a dealership.
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