Fuel retail opens up: Stores, biggies may set up ops

The Centre on Wednesday liberalised its fuel retail policy by allowing all companies to enter the fuel retail segment. Till now only companies with hydrocarbon experience and having committed investment of Rs 2,000 crore in India`s oil and gas sector were allowed to enter the fuel retail segment. Now, any corporate entity with a net worth of just Rs 250 crore can get fuel marketing rights.

The development is expected to usher in investments from global giants such as Aramco, Total, Trafigura and other foreign players. It will also allow corporares running convenience stores, shopping malls and hypermarkets to sell fuel as is the case in developed countries such as the US and UK.

"It (policy) has now been revised to bring it in line with the changing market dynamics and with a view to encouraging investment from private players, including foreign players, in this sector," the CCEA said in a statement.

"The new policy will give a fillip to "Ease of Doing Business", with transparent policy guidelines. It will boost direct and indirect employment in the sector. Setting up of more retail outlets (ROs) will result in better competition and better services for consumers."

Consequently, the entities seeking authorisation would need to have a minimum net worth of Rs 250 crore vis-A-vis the current requirement of Rs 2,000 crore prior investment.

Even the requirement of prior investment in oil and gas sector, mainly in exploration and production, refining, pipelines or terminals have been done away with, thereby inviting non-oil companies to also invest in the retail sector.

The fuel under consideration of the revised policy includes petroleum, diesel, LNG and CNG.

"In addition to conventional fuels, the authorized entities are required to install facilities for marketing at least one new generation alternate fuel, like CNG, LNG, biofuels, electric charging, etc. at their proposed retail outlets within 3 years of operationalization of the said outlet," the statement said.

"More private players, including foreign players, are expected to invest in retail fuel marketing leading to better competition and better services for consumers."

As per the statement, entities would be required to set up minimum 5 per cent of the total retail outlets in the notified remote areas within five years of grant of authorisation.

"A robust monitoring mechanism has been set up to monitor this obligation," the statement said.

"An individual may be allowed to obtain dealership of more than one marketing company in case of open dealerships of PSU OMCs but at different sites."

The current policy for granting authorisation to market transportation fuels had not undergone any changes for the last 17 years since 2002.

Meanwhile, several overseas companies had explored the potential but no investment has been made so far.

India has emerged as a key driver of global oil demand. The International Energy Agency (IEA) expects the country to account for a quarter of global energy use by 2040.

Companies, including Reliance Industries, RoyalDutch Shell and Nayara Energy, part owned by Russian oil major Rosneft account for about 10 per cent of the 64,625 fuel stations in the country, according to data posted on the Petroleum Planning and Analysis Cell (PPAC).