Private oil marketing companies (OMCs) can nibble away another 5%-6% at the market share of public sector units in the near term, even if half of private OMCs' licensed outlets become operational and distribute an average of 150,000-175,000 litres/month/pump, says India Ratings and Research (Ind-Ra). Private sector OMCs have gained a market share of 5.8% and 3.1% in distribution of diesel and petrol, respectively, since FY14 as they expanded their retail network aggressively.
According to industry reports, Reliance Industries Ltd ('IND AAA'/Stable) has a license to open up to 5,000 fuel pumps in India (around 1,400 operational as of now), BP Plc can open 3,500 retail fuel stations and Shell India Markets Private Limited about 2,000 outlets (around 85 operational as of now). Moreover, Essar Oil Limited (now sold to Rosneft and investment consortium) has about 2,320 retail outlets under various stages of implementation which are likely to become operational over the next few years.
Petrol and diesel are the mainstay for OMCs, accounting for about 51% of the total petroleum product consumption in India as of FY17 (Source: Petroleum Planning and Analysis Cell (PPAC)).
Public sector OMCs have lost around 6% market share in diesel to private players mainly since FY14 (including 0.75%-1.5% in bulk diesel sales), i.e. the time diesel prices became deregulated/market linked and provided a level playing field for private players to market products. They have also lost about 3.1% market share in retail petrol sales since FY14. Fast paced retail expansion along with aggressive tender bids for bulk diesel has helped private players capture 5%-8% market share in a short span. Public sector OMCs' combined market share in diesel and petrol was 94% and 94.9%, respectively, as of FY17.
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