Global energy giants such as Saudi Aramco, France’s Total, the Netherlands’ Shell and the UK’s BP are bullish on the fuel retail market in India
Global energy giants such as Saudi Aramco, France’s Total, the Netherlands’ Shell and the UK’s BP are bullish on the fuel retail market in India. Shell already has a fuel retail licence in India and is expanding in southern India, while BP recently got an aviation fuel retailing licence; Total sells lubricants in India.
“All are welcome here. If more companies come here, it will increase the competition among the retailers and consumers would benefit with better services,” petroleum minister Dharmendra Pradhan said. India would sustain a higher growth in fuels, he said. “As the economy is moving towards a double-digit expansion, fuel consumption growth would accelerate.”
In April 2016, petrol consumption rose 11.9% and diesel consumption rose 4.4% compared with the year-ago period, show petroleum ministry data. In FY16, petrol consumption in India went up by 14.13% to 21.8 million tonnes against 19.1 million tonnes in FY15. Diesel consumption saw an increase of 7.5% to 74.6 million tonnes in FY16 against 69.4 million tonnes in the previous year.
Public sector IOC, BPCL and HPCL operate nearly 56,190 fuel pumps across the country with IOC topping the list with around 25,363 stations. HPCL has 13,802 pumps and BPCL has 13,439 outlets.
The minister, however, said that there would be no special dispensation if global players step into the domestic retail market. “There are laid guidelines for seeking retailing licences and all companies need to follow them,” the 46-year-old minister said.
In May, Reuters quoted Saudi Aramco chief executive Amin Nasser saying that the firm wants to expand globally and is looking at potential joint ventures in several countries, including Indonesia, India, the US, Vietnam and China. Petrol was freed from government control in June 2010, while diesel prices were deregulated in October 2014.
Although the dealer commission in petrol has jumped to Rs 2.28 per litre now against Rs 0.85 a litre in 2006 and for diesel it is currently at Rs 1.44 a litre against Rs 0.51 per litre in 2006, the cost of setting up a fuel station has increased manifold. At present, setting up new pumps could cost more than Rs 1.5 crore each against Rs 30 lakh nearly a decade ago.