The Central Government has relaxed norms for setting up petrol pumps allowing non-oil companies to venture into the business. The move could help private and foreign firms to enter the fuel retailing sector. The Cabinet Committee on Economic Affairs on October 23, 2019 approved the Review of Guidelines for Granting Authorization to market Transportation Fuels.
Companies with a net worth of 250 crore rupees will be allowed to sell petrol and diesel. The companies will be subject to the condition that they install facilities for marketing at least one new generation alternate fuel such as CNG, LNG, biofuels or electric vehicle charging within three years of start of operations.
He said the retailers will necessarily have to set up five per cent of the total outlets in rural areas within five years. The Minister said the new policy will bring in more investment and give a fillip to ‘Ease of Doing Business. It will also boost direct and indirect employment in the sector.
Salient features & Major Impact:
- Much lower entry barrier for private players – the entities seeking authorisation would need to have a minimum net worth of Rs.250 crore vis-à-vis the current requirement of Rs. 2000 crore prior investment.
- Non – Oil Companies can also invest in the retail sector. Requirement of prior investment in Oil and Gas Sector, mainly in exploration and production, refining, pipelines/terminals etc., has been done away with.
- The entities seeking market authorisation for petrol and diesel are allowed to apply for retail and bulk authorisation separately or both
- The companies have been given flexibility in setting up a Joint Venture or Subsidiary for market authorisation.
- 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
- More private players, including Foreign players, are expected to invest in retail fuel marketing leading to better competition and better services for consumers
- The new entities will bring in latest technology for marketing of fuels and also encourage digital payments at the ROs.
- Entities will also encourage employment of women and ex-servicemen at the retail outlets.
- CCTV facilities will be set up at all retail outlets
- The authorised entities are required to set up minimum 5% of the total retail outlets in the notified remote areas within 5 years of grant of authorisation. A robust monitoring mechanism has been set up to monitor this obligation.
- 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.
