India’s New Fuel Retail Policy: Licensees Have To Set Up 100 Petrol Pumps, 5% Of Them In Remote Areas
Signage of HPCL seen at one of its petrol pump in Bengaluru, India. (Photographer Anirudh Saligrama/ BloombergQuint)

India’s New Fuel Retail Policy: Licensees Have To Set Up 100 Petrol Pumps, 5% Of Them In Remote Areas

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India's new liberalised fuel retail policy requires licensees to set up a minimum of 100 petrol pumps with at least 5 percent of them in remote areas.

The licensee would also be required to "install facilities for marketing at least one new-generation alternative fuel—like compressed natural gas, biofuels, liquefied natural gas, electric vehicle charging points, etc.—at their proposed retail outlets within three years of operationalisation of the said outlet”, according to a gazette notification detailing the norms for setting up petrol pumps.

The government had last month relaxed norms for setting up petrol pumps, allowing non-oil companies to retail fuel in the world's fastest-growing market.

Prior to this change, to obtain a fuel retailing licence in India, a company needed to invest Rs 2,000 crore in either hydrocarbon exploration and production, refining, pipelines or LNG terminals.

"Any entity seeking authorisation for retail marketing only should have a minimum net worth of at least Rs 250 crore at the time of making the application to the central government," the gazette notification said. It fixed the application fee at Rs 25 lakh.

"The entity needs to set up at least 100 retail outlets, out of which at least 5 percent of the proposed retail outlets shall be set up in the notified remote areas within five years of the grant of authorisation," it said.

The applicant will have to state in the application the source of supply of products, tankage and other infrastructure with capacity, means of transportation of products and year-wise number of petrol pumps proposed.

The new fuel retail policy will facilitate entry of global giants such as Total SA of France, Saudi Arabian Oil Co., BP Plc of the U.K. and Trafigura's downstream arm Puma Energy.

Total SA, in partnership with Adani Group, had in November 2018 applied for a licence to retail petrol and diesel through 1,500 outlets.

BP Plc too has formed a partnership with Reliance Industries Ltd. to set up petrol pumps but is yet to make a formal application.

While Puma Energy had applied for a retail licence, Saudi Aramco was in talks to enter the sector. State-owned oil marketing companies—Indian Oil Corporation Ltd., Bharat Petroleum Corp Ltd., and Hindustan Petroleum Corp Ltd.—currently own most of the 66,408 petrol pumps in the country.

Reliance Industries Ltd., Nayara Energy (formerly Essar Oil) and Royal Dutch Shell are the private players in the market but with limited presence. Reliance, which operates the world's largest oil refining complex, has less than 1,400 outlets. Nayara has 5,453 while Shell has 167 petrol pumps.

BP Plc had a couple of years back secured a license to set up 3,500 pumps but has not yet started doing so. It is now partnering RIL to increase the latter’s network strength to 5,500 fuel retail outlets.

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