Petroleum ministry pulls up oil firms for allocation of fewer petrol pumps

The Ministry of Petroleum and Natural Gas has expressed disappointment over fewer allocation for new fuel retail outlets (petrol pumps). In a letter to Bharat Petroleum Corporation (BPCL), the industry coordinator for public sector oil companies, the Oil Ministry has asked why the draw of lots was conducted for less than half of the envisaged number of petrol pumps.

“It is observed that till date, the draw of lots has been conducted for less than 50 per cent of the locations and accordingly around 32,000 Letters of Intent (LOI) have been issued so far,” the letter from the Ministry of Petroleum and Natural Gas said.

“Also, it has been seen that OMCs have cancelled many locations due to wrong nomenclature in advertisement and several locations have either received nil response, or nil selection has been made,” the letter added.

According to the petroleum ministry, there is a need to set up many more fuel retail outlets due to construction of new roads, highways, e-ways, and economic corridors. It also reiterated the obligation of oil companies to set up petrol pumps at remote areas to improve accessibility to consumers. This is required to ensure that oil marketing companies (OMCs) do not end up concentrating only on urban areas for better earnings, as consumption is higher there.

The mandate to set up fuel retailing outlets in rural and low volume areas is also on new licensees that have been allowed access to India’s growing market under liberalised terms. Five per cent of the total outlets that new licensees need to set up have to be in rural areas within five years from commencing operations.

The ministry has asked BPCL to submit a proposal for fresh advertisement on behalf of the industry, indicating OMC-wise numbers of locations in the proposal.

But this is not the only front where OMCs are battling with respect to fuel retail outlets. In another communication, the ministry asked public sector OMCs to comply with a Rajasthan High Court directive, asking them to consider a revision of margins payable to fuel pump operators.

“The competent authority of respondents shall consider and decide the same in accordance with law and do the needful as early as possible, preferably within a period of twelve weeks,” the Rajasthan High Court order read.

The order was in context of a plea by the Rajasthan Petroleum Dealers Association, seeking a hike in dealer margins. The OMCs have been made the competent authority to decide on the revision.

“Representations regarding revision of Dealer’s Commission received in the Ministry of Petroleum and Natural Gas are forwarded to BPCL as coordinator of OMCs to provide a suitable reply at their end,” the ministry said in response to a right to information query filed by dealers through their advocates.

Pumping Up

•Need to set up many more fuel retail outlets due to construction of new infrastructure

•Govt reiterated the obligation of oil firms to set up pumps at remote areas to improve accessibility to consumers

•The mandate is also on new licensees that have been allowed access to India’s growing market under liberalised terms

•5% of the total outlets that new licensees need to set up have to be in rural areas within five years from commencing operations

•Govt has also asked OMCs to comply with an order asking them to consider a revision of margins payable to fuel pump operators