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Throwing some light on the new liberalized norm for fuel retailing

by Swapnil Chaudhary December 6, 2019
by Swapnil Chaudhary December 6, 2019

The oil and gas industry is among the eight major industries in India and it plays a vital role in influencing the decision making process for other sectors of economy. In a bid to encourage the entry of new players in the fuel-marketing space, the government has come up with a liberalized fuel retailing norms.

Earlier, to obtain a fuel retailing license in India, a company has to commit atleast Rs 2000 crore investment in the petroleum sector. However this norm has been nipped out thus paving way for new players in the market space. The move can facilitate entry of global giants like Saudi Aramco, Total, Adani.

The policies for already authorised entities have also changed.

  • Setting up a minimum of 100 outlets with at least 5 percent of them in the notified remote locations.
  • Installation of facilities for marketing at least one new generation alternative fuel like CNG, LNG and biofuel within three years of operation of their said outlet.

In addition, entities seeking authorisation solely for retail marketing should have a minimum net worth of at least Rs 250 crore. They are required to mention in the application the source of supply of products, tankage, means of transportation of products, etc.

The last fuel retailing norm was set in 2002 and since then it has not undergone any change. It has now been revised to streamline the fuel industry with the changing market dynamics as well as encourage investments from private and foreign players.

Total has applied for a license to retail petrol and diesel in November 2018 in partnership with Adani Group. Bharat Petroleum too is in talks with Reliance Industries to set up petrol pumps however it is yet to make any formal application. By venturing into the business with Reliance it plans to enhance the latter’s presence in the fuel-marketing sphere.

The new norm also proposed that those companies failing to launch a minimum of 5 percent of the petrol pumps in the notified remote areas will be liable to pay a penalty of Rs 3 crore per pump. But the firms can choose to deposit Rs 2 crore per remote area pump at the time of licensing.

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Swapnil Chaudhary

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