With prices of both diesel and petrol now linked to the market, private sector oil companies like Essar Oil, Reliance Industries and Shell are planning an aggressive rollout of their fuel marketing business.

The country?s largest fuel retailer, IndianOil, operates over 23,900 pumps across the country while PSU firms HPCL and BPCL run another 21,000 outlets.

On the other hand, private players such as Essar Oil, Reliance Industries and Shell run a mere 2,000 fuel stations.

Market-determined pricing for diesel is vital for the viability of the retail business as the fuel accounts for 44% of the total consumption of petroleum products in the country. (from 36.64 million tonne in 2002-03, diesel sales have risen to 69.16 mt in 2012-13.) While diesel contributes nearly half to sales at fuel stations in the country, along highways, its share is as high as 80-90%.

Earlier, in 2002, when fuel prices were deregulated, private players garnered about 5% of petrol and 10% of diesel sales. However, gradually, they were forced to shut the pumps as the government again started controlling prices ? diesel was sold at a heavy discount.

Essar Oil, controlled by billionaire brothers Shashi and Ravi Ruia, is gearing up for a massive expansion of its retail business. ?The plan is to increase the number of outlets from some 1,400 now to 3,000 in three to four years, with focus on cities rather than rural areas. Diesel deregulation will also bring private oil marketing companies? retail network into the system. This will increase competition and the end-consumer will benefit,? said LK Gupta, MD and CEO of Essar Oil. In FY14, retail sales contributed about 2% of Essar Oil?s topline (Rs 107,190 crore) against 1% in FY13.

The private firm is now looking at various other formats for expansion, such as COCO (company-owned and company-operated) and CODO (company owned, dealer operated), in additional to DODO (dealer-owned, dealer operated), which is its current format. Essar Oil has a nationwide retail network. Of the four zones, west has the highest number (nearly 45%) of outlets, followed by north (about 25%) and south (nearly 17%).

Shell India Markets (SIMPL), a fully owned subsidiary of the Royal Dutch Shell Group, has 78 retail sites operational in six states, said a company spokesperson. In July 2004, Shell acquired a marketing licence from the Indian government to set up a network of up to 2,000 retail stations.

Another private player, Mukesh Ambani-controlled Reliance Industries (RIL) had also set up pumps, but had to shut shop due to the huge gap between market-priced and subsidised fuel. On the domestic side, nearly 300 retail outlets are operational, mainly in southern and western India, RIL said in its annual report, adding, ?There have been some positive signs in the market, with step-wise price deregulation, but resuming operations in all geographies and scaling up of sales will be possible after complete implementation of market determined prices for gasoline and diesel.?

?It (de-regulation of diesel price) is a very good decision. The subsidy is going to eliminate and there would be competition in the market, benefiting consumers,? B Ashok, chairman, IndianOil, told FE.