Public sector oil majors head for the highways

Mumbai, Jan 28 | Updated: Jan 29 2005, 06:15am hrs
The war for setting up petrol pumps is gradually shifting from cities to the highways. With the two private sector oil companies Reliance Industries Ltd (RIL) and Essar Oil Ltd (EOL) targeting national highways, public sector oil companies have also shifted their attention.

While public sector oil companies have been active in rural areas, this has largely been unorganised. As Hindustan Petroleum Corporation Ltd (HPCL) executive director (retail) SP Choudhry puts it, Oil companies are present in rural areas but in an unorganised manner. Now we are focussing on the rural market and want to tap low volume segments also.

With entry barriers low in the highway segment, public sector oil companies see the new petrol pumps from private companies as a new challenge. But we are not unaware, said Mr Choudhry. He added that there is a lot of space available for the oil companies at a relatively lower price which makes it attractive.

Combined with this is the governments policy to increase total road area. It is estimated that over 60% of the diesel demand will emanate from the Golden Quadrilateral, East-West and North-South corridors, said RIL ED Hital Meswani, adding this will be a major basis for consideration anyone planning to establish retail outlets. RILs initial focus was on retailing diesel.

In fact, the public sector oil companies had anticipated this. Indian Oil Corporation (IOC), the leader in petroleum products retailing, with about 9,000 petrol pumps has already embarked on a rural program to arrest its falling market share. The company which enjoyed a 56% market share five years in petro-products sale has seen it decline to 52%. It has launched mobile retail outlets. It has planned about 150 such outlets next year.

HPCL and Bharat Petroleum Corporation Ltd (BPCL) have also launched mobile outlets. BPCL has kicked off the first such project in Ahmednagar district, Maharashtra.

The mobile retail outlet is a huge tanker with a normal dispensing unit which has a suction pump with digital display. The tanker which is being used for the trial has a capacity to transport 11,000 litre of diesel. The total cost of setting up one such retail outlet is about Rs 12 to 15 lakh, depending on the size of the tanker.