Reliance Industries Ltd has signed a new pact with its long-time partner BP Plc to sell retail fuel such as petrol and diesel across the country, building on the Mukesh Ambani firm’s existing 1,400 retail fuel outlets.
Reliance Industries Ltd has signed a new pact with its long-time partner BP Plc to sell retail fuel such as petrol and diesel across the country, building on the Mukesh Ambani firm’s existing 1,400 retail fuel outlets. The new joint venture between RIL and BP aims to grow rapidly to a total of 5,500 sites over the next five years, RIL said in a statement. As per the terms of the agreement, Reliance Industries will hold a 51% stake in the new joint venture, while BP will hold the remaining 49%. Notably, the latest joint venture will also include RIL’s aviation fuel business, which currently operates at over 30 airports across India, providing participation in this rapidly-growing market.
The venture comes at a time when fuel retailers are eyeing exponential growth in the fuel retailing space, given the bright prospects in the country. India is expected to be the fastest-growing fuels market in the world over the next 20 years, with the number of passenger cars in the country estimated to grow almost six-fold over the period, according to estimates. Notably, the car penetration in India continues to remain below 20 units per 1,000 people, compared with as much as above 500 units in most developed nations. There are close to 30 lakh cars sold in India every year.
Sharing BP Plc’s rationale for this venture, CEO Bob Dudley said that India is set to be the world’s largest growth market for energy by the mid-2020s. “BP is already a large investor here and we see further attractive, strategic opportunities to support this growth. We are working closely with Reliance to develop India’s gas resources, helping meet the country’s demand for that key fuel,” Dudley said in the statement.
Mukesh Ambani looks to strengthen the ties between the two giants, a partnership which began in 2011 and expanded in 2017 to develop differentiated fuels and mobility businesses. Notably, the two have jointly committed to invest $5 billion in bringing to production three sets of natural gas fields in the Krishna Godavari basin block in the Bay of Bengal by 2022.
“Our robust partnership in developing gas resources in India has now expanded to fuel retailing and aviation fuels. This transformative partnership will deepen our engagement with the consumers in further enhancing the world-class services across the country,” Mukesh Ambani said in the statement today. It is anticipated that the agreement will be finalised in 2019 and, the transaction will be complete in the first half of 2020, It is anticipated that final agreements will be reached during 2019 and, the transaction will be complete in the first half of 2020, subject to regulatory approvals.
- First published on www.financialexpress.com on Tuesday, 7 August 2019