Oil PSUs barred from setting up petrol pumps

With petrol pumps mushrooming all over the country, the government has barred oil PSUs from setting up new outlets at their investment.

The Petroleum Minister this week issued an order asking the state-owned fuel retailers to set up petrol pumps only when the dealer is willing bear the Rs 1-1.5 crore cost of a pump.

"It has now been decided that henceforth oil marketing companies (OMCs) will not invest in opening of new retail outlets and the investment is to be made by prospective dealers only," the order stated.

India has over 43,000 petrol pumps, perhaps the highest in the world. The three state-owned fuel retailers Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL) have been crowding the roadside with hordes of petrol pumps.

In last four years, the number has jumped from roughly 18,000 to over 43,000 currently. These numbers do not include the 2,500-odd outlets owned by private retailers like Reliance Industries and Essar Oil. The mushrooming of petrol pumps, industry sources said, had led to throughput fall from an all India-average of 210 kilolitres per month three years ago, to just 130 kl.

The order, which said it was being issued with the approval of the Oil Minister M Veerappa Moily, further stated that "OMCs may specify suitable standards of service/safety of retail outlets/ equipment and operationalise this through a suitable retail outlet scheme. All future retail outlets should be automated."

The decision came into effect from December 3, the date on which the order was issued.

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