Government relaxes norms to set up petrol pumps and promote alternative fuels

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The Government of India has issued new entry norms for setting up petrol pumps, inviting non-oil retailing companies with a net worth of as low as INR250 crores to enter the business. This is the biggest reform in the Indian fuel retailing sector since 2002 and is expected to attract private and foreign companies to invest in one of the largest markets in the world.

This reform is applicable along with certain conditions to be followed by the companies:
• Installation of at least one of the alternative fuels – electric vehicle charging, biofuels, Compressed Natural Gas or Liquid Natural Gas within 3 years of commencing the operations
• At least 5% of the stations must be set up in rural areas within 5 years

The decision was taken by the Cabinet Committee on Economic Affairs headed by Prime Minister Narendra Modi in alignment with the government’s commitment to enable a market-driven economy. Currently, the majority of the petrol pumps i.e. 65,554 in the country are owned by state-run oil retail companies such as Indian Oil Corp, Bharat Petroleum Corp Ltd, and Hindustan Petroleum Corp Ltd. As a result of this, these companies have a say on the oil prices, which is predicted to end with this new reform.

Among the private players, Reliance Industries, which runs the largest oil refining complex, owns about 1400 pumps. Some of the oil majors have shown interest in the Indian market previously through partnerships with Indian companies, so this reform is predicted to affirm relationships further. In 2018, Total announced its partnership with Adani Power, while BP is working on an alliance with Reliance Industries. Puma Energy and Saudi Aramco are expected to enter this sector as well.

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Date: 28-10-2019 | Source name: Economic Times

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