The licences were given under a new liberalised rule that allows any entity with a minimum net worth of Rs 250 crore to apply for authorisation to retail petrol and diesel.
The government has granted auto fuel retailing licence to seven new entities including Reliance Industries Ltd and a joint venture of Reliance and BP, Minister of State for Petroleum and Natural Gas Rameswar Teli said on Monday. The licences were given under a new liberalised rule that allows any entity with a minimum net worth of Rs 250 crore to apply for authorisation to retail petrol and diesel.
Under the November 2019 policy, “marketing authorisation” has been granted to Reliance Industries Ltd, IMC Ltd, Onsite Energy Pvt Ltd, Assam Gas Company, M K Agrotech, RBML Solutions India Ltd and Manas Agro Industries and Infrastructure, Teli said in a written reply to the Lok Sabha.
RIL already had a fuel retailing licence, under which it had set up over 1,400 petrol pumps in the country. But this licence was transferred to its subsidiary Reliance BP Mobility (RBML). And so, billionaire Mukesh Ambani’s firm applied and got another licence. A separate joint venture of the firm with BP, called RBML Solutions India Ltd too has got a licence. It isn’t clear if RIL and RBML Solutions will set up separate, competing petrol pumps.
The “Ministry of Petroleum and Natural Gas (MoPNG) vide Resolution dated November 8, 2019, has revised the guidelines for authorization to market transportation fuels,” Teli said.
“The revised guidelines would promote ease of doing business and boost private players to invest in the retail sector.” Besides doing away with the earlier requirement of investing Rs 2,000 crore in oil and gas sector to be eligible for a fuel retailing licence, the new liberalised petrol pump norms require licensees to set up a minimum of 100 outlets with at least 5 per cent of them in remote areas.
The licensee is required to “install facilities for marketing at least one new generation alternate fuels like compressed natural gas (CNG), biofuels, liquefied natural gas, electric vehicle charging points etc at their proposed retail outlets within three years of operationalisation of the said outlet.” It fixes Rs 250 crore as the minimum net worth for obtaining the licence.
State-owned oil marketing companies — Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) — currently own most of the 77,709 petrol pumps in the country. RBML, Nayara Energy (formerly Essar Oil) and Royal Dutch Shell are the private players in the market but with limited presence. RML has 1,422 outlets, Nayara 6,152 while Shell has just 270 pumps.
BP had a few years back secured a licence to set up 3,500 pumps but has not yet started doing so. It has since decided to venture into the business with RIL with plans to scale up RIL’s present network strength to 5,500. “The entities while applying for marketing authorization have to, inter alia, provide details about their marketing plan including details of the source of supply. Such entities are free to source their supplies from different sources including PSU OMCs in their best commercial wisdom,” Teli said.
While the opening up of the retail licensing is believed to usher in competition, the minister said, “at present, it may not be possible to gauge the quantum of change in countrywide auto fuel supply as the new entities have been granted marketing authorisation fairly recently.”
Those granted licences include Chennai-based IMC (once called Indian Molasses Company), which specialises in oil terminals, and Assam government firm, Assam Gas Company. Assam Gas Company is in the business of gas transportation. Not much is known about Onsite Energy which was incorporated in May 2020.
M K Agrotech is part of a diversified conglomerate with interests across agricultural products such as sunflower oil, real estate, and crude oil and gas extraction, while Manas Agro Industries and Infrastructure has its own brand of Liquefied Petroleum Gas (LPG or cooking gas).