PSU fuel retailers move to ambush private players

State-owned pumps plan discounts

The re-entry of private petrol pumps may be a boon for consumers, as increased competition among market players may result in more freebies and lower rates for buyers of the fuel.

With the decade-old memory fresh in their minds, when private firms snatched a substantial share of sale of diesel from their public counterparts, the state-owned oil companies are contemplating giving discount to retain consumers.

According to sources in oil firms, a proposal to this effect has been sent to the Petroleum Ministry, and work on this could move ahead if the ministry accepted the proposal.

If this happens, each petrol pump can have some discount on the sale of fuel, and the rates could also vary quite like banks offering attractive interest rates to attract more customers. 

India has close to 55,000 petrol pumps, almost all under the control of state firms. But a scrapping of subsidy on petrol, and lately on diesel, has renewed interest among private firms to re-enter the business.

The government has given them a green signal too, with eased norms. Private retailers’ interest stems from the fact that the volume of diesel sold at the pumps is about three times that of petrol.

Ten years ago, private players had taken away more than 15 per cent share in the sale of diesel from their state-run counterparts within years of their entry.
Extensive use of technology, enhanced level of service and control over dealers made it possible for private firms to move up the ladder in no time.
It is for the same reason, the state-owned companies are lobbying with the government to get a free hand to fight private competition.
To attract more and more customers, the state-owned companies could offer some discounts, and some could be offered by the dealers, sources said.
At present, dealers earn a commission of Rs 2.37 per litre on sale of petrol, and Rs 1.45 a litre on the sale of diesel in Delhi. Sources said that the dealers should be in the position to offer part discount, in order to increase the sale of the two fuels. This could result in more income for them.
But analysts maintain that the situation today is quite different than it was 10 years ago. At present Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) have more than doubled the number of retail outlets in the last 10 years. They have also improved their infrastructure and services to customers.