You are here: Home » Economy & Policy » News
Business Standard

Economics can support another 30,000 petrol pumps, says CRISIL report

CRISIL pegged the current throughput of these outlets at 160 kilo litres a month (KLPM), which is less than half of what it is for a developed country like the US

Amritha Pillay  |  Mumbai 

petrol pump
Representative Image

The petroleum ministry’s efforts to further expand the country’s retail fuel network may eat into its own existing market, instead of catering to a new one, a report by rating agency has suggested. The planned expansion would be feasible if stopped at less than half its target, it said.

In November 2018, the government allowed the three oil marketing companies (OMCs) — Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) — to add 78,493 pumps combined to their existing retail network.

“The economics do not support the addition of 78,000 There is room for only less than half, that is 30,000 petrol pumps, if the pumps are to maintain current throughput levels,” said in its note.

At present, India has 64,624 fuel retail outlets. pegged the current throughput of these outlets at 160 kilo litres a month (KLPM), which is less than half of what it is for a developed country like the US.

“If all the proposed pumps are commissioned, the throughput of dealers will be significantly affected and operating the pumps, for all intent and purposes, will become unviable,” the CRISIL report added.

In terms of throughput, state-run oil companies are already under pressure compared to private companies such as Reliance Industries and Shell. CRISIL’s report suggests RIL’s fuel retail throughput stands at 300 KLPM, while that of is lower than that of state-run entities.

First Published: Mon, June 17 2019. 23:30 IST
RECOMMENDED FOR YOU