JOIN USWith increased private participation in retail sector appearing imminent, the ministry of petroleum is contemplating to offer petrol pumps on “self investment models” without any outlay assistance from oil marketing companies.
Under this new scheme, investments, maintenance and running costs and will be done by dealer while the Oil marketing companies (OMCs) — IOCL, HPCL and BPCL – will mentor successful bidders on facility and equipments required, engineering and list of vendors to fetch fuel, said ministry sources. Besides, the OMCs will decide fuel and other product prices offered at outlets to ensure that customers are not taken for a ride.
Till now OMCs are operating more than 50000 retail outlets all over the country under different categories — company-owned and company operated (COCO), company-owned and dealer operated (CODO) and dealer-owned and dealer operated (DODO).
The ministry is mulling to add another category in giving out retail outlets to individuals and “legal entity” by relaxing rules in the existing dealer selection policy. This scheme will have a provision for multiple dealerships – which is an indication of opening up of the retail sector for private companies.
Increased competition
Reliance and Essar have been operating 300 and 900 fuel stations respectively which are below their individual capacities. And Shell controlled outlets are about 76. But these are not government franchises.
The ministry move if works out would help the oil public sector undertakings (PSUs) to fight under recoveries to the tune of more than Rs 62837 crore against diesel for 2013-14, Rs 46458 crore against LPG and Rs 30574 crore against kerosene which puts burden on their financial health.
The oil marketing companies are also pushing themselves to remain competitive in the market with diesel being deregulated. For private operators it is easier to expand their fuel stations to meet the demand in any part of the country unlike oil PSUs which have to meet social obligations before distributing outlets, a ministry official explained.
It is learnt the oil marketing companies’ boards have cleared their own schemes of zero investment pumps and submitted them to the ministry for a final nod.
Giant step
Relaxation of the current dealer selection policy comes after increased participation of pvt sector in retailing
Under the new scheme, investments, maintenance and running costs and will be done by dealer
Oil marketing companies (OMCs) — IOCL, HPCL and BPCL— will decide fuel and other product prices offered
The move will help the oil PSUs to fight under recoveries to the tune of more than Rs 62837 crore