The petroleum ministry has given its go-ahead for the proposal by Haldia Petrochemicals to start retailing of transportation fuels. The government’s nod comes within a month of the company submitting its application for the business.
Sources told FE that Haldia Petrochemicals has plans to set up 50 retail outlets for marketing of petrol in the districts of Purbi Medinipur, Paschim Medinipur, Bankura and Purulia in West Bengal in the first phase. In the second phase, it intends to set up an additional 50 retail outlets across Howrah, South 24 Parganas, North 24 Parganas, Hooghly, Nadia and Burdwan.
“Entry of more private players in fuel retailing will make the sector more competitive. The decision exemplifies the government’s continuing emphasis on promoting ease-of-doing-business and is also in line with the ‘Make in India’ philosophy,” a senior petroleum ministry official told FE.
In the current policy framework, a company investing or proposing to invest R2,000 crore in exploration and production, refining, pipelines or terminals is eligible for granting authorisation of marketing transportation fuels, including petrol, diesel and aviation turbine fuel (ATF). The government also extended permission to the UK’s BP to roll out ATF retailing in India.
India imported 202.9 million tonnes of crude oil in FY16, 7.11% higher than 189.43 million tonnes of imports in FY15. The energy demand, particularly for petroleum products, are peaking fast in the Asian nation. In August, the demand for petroleum products witnessed the quickest jump of 11% year-on-year, highest in the past five years. This growth is primarily led by diesel and petrol growing at 14% and 25%, respectively, year-on-year.
Petrol was freed from government control in June 2010, while diesel prices were deregulated in October 2014.
The public sector players — IOC, BPCL and HPCL — operate nearly 56,190 fuel pumps across the length and breadth of the country with IOC topping the list with around 25,363 stations. HPCL has 13,802 pumps while BPCL has another 13,439 retail outlets. Private retailer Essar Oil is operating 2,400 pumps and are in the process of putting another 2,800 stations in the next 18 months. The Ruias-promoted firm targets to reach 4,300 pumps during this financial year.
Though the dealer commission in petrol has jumped to R2.28/litre now against R0.85/litre in 2006 and for diesel it is currently at R1.44/litre against R0.51/litre in 2006, the cost of setting up a fuel station has increased manifold. At present, setting up new pumps could cost more than R1.50 crore each against R30 lakh nearly a decade ago.
Haldia Petrochemicals targets to set up 50 retail pumps
Currently, IOC, BPCL and HPCL operate more than 56,000 fuel pumps
IOC tops the list with more than 25,000 stations
Highest in 5 years, the demand for petroleum products jumped 11% y-o-y in August
This growth is primarily led by diesel and petrol growing at 14% and 25%, respectively y-o-y