BP Eyes India’s Fuel Market, Wants Gas Under GST
BP Group chief executive said his firm will look to expand its presence in India after joint ventures with Reliance Industries.
Labelling India as an extraordinary country growing at an incredible scale, energy supermajor BP Plc. on Monday said it is looking to expand its presence in the nation in fuel retailing and mobility solutions, but wanted natural gas to be included in the Goods and Services Tax regime.
Speaking at the India Energy Forum by CERAWeek, BP Group chief executive Bernard Looney said his firm in partnership with Reliance Industries Ltd. will in the next 4-5 years set up 5,500 retail sites that will not just sell petrol and diesel but also offer mobility solutions like EV charging facility.
"India is an extraordinary country with an extraordinary history, an extraordinary group of people, and with extraordinary ambition," he said, adding the country has a growing population, and an ambitious agenda to cut emissions.
This, he said, was "very, very compelling".
"Why is India important, because it is India," he said, adding energy mix in the country could fall from 50% coal to 40%, while gas and renewables will grow.
Looney said India will be the fastest-growing fuel and lubricant market in the next 20 years and his group's venture with Reliance will grow the network of petrol pumps to 5,500 in the next 4-5 years from the current 1,400.
As many as 80,000 jobs will be created in the building of the network, he said, adding the venture will offer mobility solutions under the Jio-BP brand.
RIL, currently, has about 1,400 operating petrol pumps and some 31-odd aviation fuel stations at airports. These have been taken over by the RIL-BP joint venture and will be grown in the future. While petrol pumps will be expanded to 5,500, aviation refuelling facilities will grow to 45.
RIL holds 51% in the new joint venture company, while BP has the remaining 49%. BP paid about Rs 7,000 crore to acquire the 49% stake.
This is the third joint venture between Reliance and BP since 2011.
BP had in 2011 bought a 30% stake in 21 oil and gas exploration and production blocks of Reliance for $7.2 billion. At that time, another 50:50 joint venture, India Gas Solutions, was set up for sourcing and marketing gas in India.
RIL-BP is investing $5 billion in developing the next set of discoveries in the KG Basin D6 block.
"Our production with Reliance will account for 15% of India gas production," he said.
Looney said while the company feels the ease of doing business on the ground, India is a complex market.
GST was a welcome federal initiative to ease trade and it will be good if natural gas is included in that, Looney said.
When Goods and Services Tax , which amalgamated 17 different central and state levies like excise duty and VAT, was implemented in July 2017, five products - petrol, diesel, crude oil, aviation turbine fuel, and natural gas, were kept out of its purview for the time being.
This meant that gas users could not set off tax paid on inputs against those on the final product and tax on tax continued, disincentivising the use of the fuel.
He said BP has a "deep, trusting relationship" with Mukesh Ambani, chairman of RIL.
On the impact of Covid-19 on oil demand, he said it was too early to say what the true impact was but there would be some impact in the medium to long term.
But communities around the world are demanding more affordable, reliable, and clean energy and BP was committed to providing solutions for the same, he said.
Speaking at the same event, Total CEO Patrick Pouyanne said India is one of the largest markets in the world for energy, but its per capita consumption is just 30% of the world average, offering huge potential.
"We want to be an important part of India," he said, adding the French group is investing in setting up LNG import terminal, city gas expansion, and renewable energy projects in the country.