The convenience of buying petrol and diesel along with groceries at shopping malls is just a regulation away. The Narendra Modi-government is planning to relax fuel retailing norms that will allow the malls to have their own pumps to push fuels into the cars of their shoppers.
The oil ministry is set to move a cabinet note relaxing the norm later this month, paving the way for intense competition in a sector .
Data showed that in the US, the UK and other developed countries, the marketing of transportation fuel has shifted from traditional integrated oil companies to pure retailing companies such as hypermarkets and convenience stores which source their fuel from either a fixed refiner or from any refiner.
They then dispense the fuel from their forecourt either in their own brand or in the refiner’s brand name. As they are the retailers of other products, they find synergy in retailing transportation fuel by offering their customers these products in their premises.
In the US, nearly 83 per cent of the outlets are convenience stores that dispense about 80 per cent of the total fuel sold. The traditional oil companies own about 13 per cent of the retail outlets selling only 6.2 per cent of the fuel.
The hypermarkets, which own only 4 per cent of the retail outlets, sell 13.8 per cent of the fuel.
In the UK, the hypermarkets own 15.8 per cent of the retail outlets while selling 43.5 per cent of the fuel. Independent dealers (who are neither part of the oil company or hypermarkets) own 62 per cent of the retail outlets but sell 31.7 per cent of the fuel. The rest are either owned or leased by the oil company.
The Kirit Parikh-led expert committee on fuel retailing has recommended allowing marketing rights for the sale of petrol and diesel to companies with a net worth of Rs 250 crore.
Global players need to commit an investment of Rs 2,000 crore to get the fuel marketing rights. The panel wants companies to seek separate licences for retail and bulk businesses.
Bulk is defined as minimum 12,000 litres per delivery to end users. If a company wants a bulk marketing licence, it must have a net worth of at least Rs 500 crore.
Companies seeking the licence must set up at least 100 retail outlets, of which at least 5 per cent should be in notified remote areas, within seven years of obtaining the licence, according to the panel’s recommendations.
The move would allow companies such as Saudi Aramco, Total and Trafigura to gain a foothold in a sector dominated by state-run entities.
Reliance Industries, Nayara Energy (formerly Essar Oil) and Royal Dutch Shell are the private players but with a limited presence.