State-run Indian Oil Corporation (IOC) has sought a 50:50 partnership with Reliance Industries (RIL) for operating the private firm's closed 1,432 petrol pumps.
Besides IOC, Royal Dutch Shell too is believed to have evinced interest in reviving the petrol pumps, industry sources said.
RIL as part of a two part bid process had sought Expression of Interest (EoI) from IOC, Shell, Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) by today for a possible partnership for reopening the petrol pumps.
The company will set up a data room and interested parties will now do due diligence before making a firm financial proposal, based on which billionaire Mukesh Ambani's firm will choose a partner.
Sources said while RIL had wanted the retailers to select between 26, 50 and 74 per cent equity stake they would like in the proposed joint venture company that would be set up with the hived-off pumps, IOC had preferred equal partnership.
An equity lesser than 50 per cent did not make sense for IOC as it was not looking for a portfolio investment. Also, a stake higher than 50 per cent would turn the company into a public sector company which was also not what IOC was looking for.
The 1,432 petrol pumps, that were shut in March 2008, had captured 15 per cent auto fuel market share, selling 4-4.5 million tonnes of petrol and diesel annually.
IOC, sources said, feels it can get atleast 2 million tonnes of additional sales through the pumps considering the fact that the RIL's pumps would eat into volumes of the three retailers - IOC, BPCL and HPCL - in proportion to their current share of 50:25:25, respectively.
For Shell, it made business sense as these petrol pumps would add to the 75-80 outlets it already as on the ground and help it get a respectable market share. Of the 75-80 pumps it had set up, Shell is currently operating about 55.
IOC has about 17,600 petrol pumps.
The partnership with state-run firms would help RIL overcome the handicap of not being able to use fuel from its two refineries at Jamnagar in Gujarat because they have been converted into only-for-exports units.
Sources said branding, fuel sourcing and operational issues would have to be sorted out between RIL and the prospective partner.
HPCL was not favourably inclined to the proposal while BPCL has not made up its mind yet.
An RIL spokesperson was not available for comments.
The company, which had invested Rs 5,000 crore in setting up the retail network, had previously worked on three different models to reopen the 1,432 pumps, the source said.
