Fuel retailing business in India
Source：CNBCTV18
From：Taiwan Trade Centre, Kolkata
Update Time：2019/07/09
Expert panel recommends steps to open up fuel retailing business in India
An expert committee formed by the oil ministry has recommended several steps to ease regulation in order to open up the fuel retailing in India. The expert committee has submitted its suggestions to the ministry of petroleum and natural resources (MoPNG), which has sought for stakeholders’ comments within two weeks from May 28.
Key recommendations of the expert committee include relaxation of requirement of Rs 2,000 crore investment in the refining business or 3 million metric tonnes (MMT) of crude production in the oil and gas sector in India. This particular provision was an entry barrier for companies meaning to enter the retailing business of petrol and diesel in India.
The committee is also of the view to have a minimum requirement of Rs 250 crores as net-worth to obtain authorisation so that only serious players enter the segment for business.
A provision of Rs 3 crore as bank guarantee for each outlet under remote area retail outlet has also been recommended. It will be mandatory for an entity to commit 5 percent of remote area retail outlets within 2 years of the authorisation grant. There will also be an option to pay upfront an amount of Rs 2 crore per outlet in case retailer decides to skip remote area retail outlet provision under the guidelines, according to recommendations of the committee.
The committee was constituted in 2018 to look into various issues related to the implementation of existing guidelines for fuel retailing in India. The idea behind an expert committee was to improve customer experience in retail marketing by introducing more competition from private companies.
The expert committee was convened by Ashutosh Jindal, joint secretary of MoPNG, with committee members, including renowned economist Kirit Parikh, former petroleum and natural resources secretary GC Chaturvedi, former Indian Oil chairman MA Pathan, and Erroll D'souza, director at Indian Institute of Management.
The idea is to include non-oil sector companies and large format malls, hypermarket places which sees huge footfalls in terms of retail fuel consumer. Some of the models discussed by the committee were that of the United States where over 1,00,000 fuel retailing companies are not franchises of any large oil companies. Similarly, the United Kingdom has over 10,000 retail companies and over 50,000 retailing companies in the European region for fuel.
While India has only seven fuel retailers with 64,626 outlets, Indian Oil leads with 42.9 percent market share followed by Hindustan Petroleum at 23.9 percent with 15,440 outlets and Bharat Petroleum at 22.9 percent with 14,802 outlets as on April 2019. Private sector barely constitutes about 10 percent market share with players like Reliance Petro Marketing, Nayara Energy and Shell India.
For any changes to the existing fuel retail guidelines, MoPNG will have to get a nod from the cabinet after assessing recommendations of the expert committee along with comments received from the stakeholders.
Source：https://www.cnbctv18.com/energy/expert-panel-recommends-steps-to-open-up-fuel-retailing-business-in-india-3502501.htm