• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Balaji C. Mouli

NEW DELHI, April 14

THE Government will be shortly untying the hands of the public sector marketing companies and allowing them to sign on dealers for retailing petrol and diesel.

"We plan to issue interim guidelines for selection of dealers by public sector oil marketing companies pending finalisation of the final regulations," according to a senior Government official. The marketing heads of oil companies met senior Government officials late last week and this was conveyed to them.

Oil marketing companies have been crying foul over the informal ban imposed by the Government on selection of dealers in February this year since it does not apply to private players such as Reliance who has plans to set up around 500 retail outlets during the current financial year. The effect of ban has already taken its toll. "In a good year, we set up around 350 dealerships. Last year, we did only 220," a senior Indian Oil Corporation official lamented. Last year, Bharat Petroleum Corporation Ltd (BPCL) set up 170 retail outlets, around the same as Hindustan Petroleum Corporation Ltd (HPCL).

The origin of the ban goes back to the `petrol pump' scam in August last year when 417 cases of politically connected allotments were uncovered by the media. This led to the Government scrapping the selection process through the Dealer Selection Boards. Integral to the selection process was the reservation of dealerships for certain sections of the society.

Also, allotment of multiple dealerships to the same entity was not permitted. These are the two contentious issues over which the Government has not been able to take a position, hence the delay in finalising the regulations. The ban on selecting dealers, sometime in early February, was triggered by IBP Ltd, a subsidiary of Indian Oil Corporation (IOC).

IBP set out its own guidelines, and went ahead and appointed 450 dealers of retail outlets by issuing letters of intent. This incensed BPCL, which was denied permission from the Government to select dealers till such time that the latter puts in place new selection norms. BPCL took up the issue with the Government, leading to an across-the-industry ban till the norms were put in place.

The restriction in dealership selection has injured the interests of the public sector oil marketing companies since it cannot keep acquiring land and holding it in the anticipation that the selection norms will be issued shortly. "We have been issuing advertisements for acquiring land for dealerships. However, land acquisition is an expensive affair and we cannot keep holding it. Besides, public sector watch-dogs such as the Comptroller and Auditor General (CAG) could blame us on such an issue. Also, in cases where we do not acquire the land, company personnel cannot be deployed to man the outlets due to lack of required manpower, which anyway will be an expensive proposition," a senior oil marketing company official said.

From the Government's point of view, the sensitive issue of reservation is not an easy one since the private sector is not laden with such obligations. The reason for the delay in taking a decision is not far to find - over one in four dealers belong to the reserved category.

Of the 19,049 retail outlets operating today which are entirely in the public sector fold, around 5,078 outlets or 26 per cent are in the reserved category. These include sub-categories such as scheduled caste (1,365), scheduled tribes (545), unemployed graduates (699), physically handicapped (699), defence category (399), freedom fighters (22), sports persons (20) and `others'.

This sub-category includes company-owned-and-operated outlets and a host of other qualifiers including social worker, discretionary quota including that awarded on compassionate grounds. Currently the number of outlets under this category stands at 1,104.

Article E-Mail :: Comment :: Syndication

Stories in this Section
`Oil PSUs will soon be allowed to appoint dealers'

Copyright © 2003, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line