BP Plc CEO Bob Dudley has said that the British oil major is looking at fuel retail business with Mukesh Ambani's Reliance Industries (RIL).
BP Plc CEO Bob Dudley has said that the British oil major is looking at fuel retail business with Mukesh Ambani’s Reliance Industries (RIL). In an interview with ET Now, he also said that the company is making big commitments for natural gas in India, adding that the government was willing to give BP plc licences two years ago go fuel retailing.
Reliance Industries has over 1,200 fuel pumps across the country, most of which it reopened rapidly after the government began gradual deregulation of diesel prices in 2014. Meanwhile, BP Plc has an in-principle approval to open 3,500 retail fuel stations in India.
Private companies are keen on a vast expansion of their fuel retailing businesses given the huge growth potential in the industry on the back of the rising vehicle population in the country. Car penetration in India is at a mere 18 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.
Private fuel retailers, including Reliance Industries, are expected to add 6,000-8,000 fuel retail outlets by the financial year 2020-21, according to a CRISIL Research report released earlier last month. With this, private petrol and diesel retail companies are expected to ramp up their market share to 12-15% by then from 4-5% in FY16, it said. The three state-run oil marketing companies Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp are expected to add 9,000 fuel pumps during that period to their existing over 53,000 outlets.
Private retailers including Reliance Industries and Essar Oil, who had gained about 6% market share of fuel retailing industry by 2004 with 1,840 outlets, had started closing down the fuel pumps after the government’s intervention to control rapidly rising fuel prices in 2005. Their share fell to a mere 1% by 2010. However, buoyed by the deregulation of the fuel prices in 2010, the private retailers again began ramping up their retail presence.
Indian government compensates the state-run oil marketers Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp for selling LPG and Kerosene below market prices. However, since the deregulation in 2010, pricing of petrol and diesel is left to the companies themselves.