India could relax regulations governing the entry of foreign firms in the country’s oil retailing business. This, it believes, will create more competition and, in turn, provide consumers fuel at a better price.

“Right now, the conditions mandate investment by the company before starting fuel retailing operations. But to bring in more competition, we have to revisit and re-examine those conditions,” Dharmendra Pradhan, Minister of State (Independent Charge), for Petroleum & Natural Gas, said.

At present, to obtain a fuel retailing licence in India, a company needs to invest ₹2,000 crore in either hydrocarbon exploration and production, refining, pipelines or liquefied natural gas (LNG) terminals.

“We are in a consumer-centric market. There was a time when we needed to ensure that the consumer is not exploited. Now, we want the consumers to get the best rates for whatever they buy. To do that, competition is required and the conditions for investment before starting fuel retailing need to be re-examined,” he told BusinessLine .

Global interest

Pradhan’s comment could be interpreted as a ‘positive signal’ by some global majors, such as Saudi Aramco, who have been evincing interest in doing business here.

The Minister is taking his cue from the recently announced Civil Aviation Policy. “The relaxation of 5/20 norms under the aviation policy has given us a good model,” he said. 

In the last five-six years, the country’s petroleum retailing business has seen a change with the government deregulating auto fuel prices in phases.

Though dominated by public sector retailers, there were domestic private players — Reliance Industries and Essar Oil — as well as global majors such as Shell in the business here.

Prior to deregulation, the going was tough for private and global players as they were compelled to sell fuel at par with the subsidised rates at which public sector entities sold. “But, now, international players are also keen to enter the retail business,” he said.

There are 56,190 fuel retailing outlets in the country (as on April 1). Of these, 93 per cent belong to public sector oil marketing companies Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation. A few belong to Mangalore Refinery & Petrochemicals Ltd. Indian Oil Corporation alone has almost 45 per cent of the outlets.

In the private sector, Essar Oil has the largest number at 2,100. Reliance Industries comes in second with 1,400 outlets and Royal Dutch Shell has 82, according to Petroleum Planning and Analysis Cell data.

Shell also operates an LNG terminal in Hazira, Gujarat that allows it to have fuel retailing operations in India. BP Plc got approval to sell aviation turbine fuel in the country in January, after a long wait.

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