Margins turn positive after recent fall in global oil prices.
State-run oil marketing companies (OMCs) are planning to put expansion of their retail outlets back on track as lower international crude oil prices have enabled them to register profits on most of the petroleum products they sell.
The three OMCs — Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) — were in July 2008 asked by the government to stop “indiscriminate” setting up of petrol pumps as it was one of the reasons for mounting losses on fuel sales.
IOC, BPCL and HPCL currently own about 37,000 fuel stations in the country.
“We reviewed the directive a month ago and asked the OMCs to consult their board of directors before they plan to set up retail outlets. The government never restricted the OMCs from setting up petrol pumps,” said RS Pandey, secretary, Ministry of Petroleum and Natural Gas.
The OMCs incur a loss on the sale of petroleum products as they sell them at controlled prices. But with international crude oil prices dipping 69 per cent from an all-time high of $147 a barrel in July to under $45 a barrel, the companies’ margins on petrol and diesel sales have turned positive.
After the recent fuel price cut on December 6 — petrol by Rs 5 a litre and diesel by Rs 2 — the OMCs are making a profit of Rs 11.48 on petrol and Rs 2.92 on diesel. In November, however, the companies were making a profit of Rs 14.89 a litre on petrol and Rs 3.03 a litre on diesel.
“The matter of allowing OMCs to set up petrol pumps was reviewed some time back and the decision to open new outlets has been left to the companies. The location of the new outlets, however, will depend on where the potential lies,” said GD Daga, director (marketing), IOC.
| PSU RETAIL OUTLETS | ||
| Existing* | Planned in 2009* | |
| Indian Oil | 18,100 | 1,700 |
| Bharat Petroleum | 10,000 | 1,100 |
| Hindustan Petroleum | 9,000 | 900 |
| * approximate numbers | ||
This fiscal, IOC plans to roll out around 300 retail outlets. “We have to look at the potential areas where it makes sense for us to be present. We have thus opened less number of outlets this year,” added Daga.
IOC spends around Rs 50 lakh on setting up a retail outlet in an urban area and around Rs 8 lakh on a rural area pump.
HPCL, on the other hand, plans to focus only on the rural segment. “We are very selective about the locations we plan to be in. While this year we do not plan to open any retail outlet, next year we will open around 200,” said Roy Choudhary, director (marketing), HPCL.
HPCL shells out around Rs 3 crore for setting up a retail outlet in an urban area and Rs 25 lakh to build an outlet in a rural area.
The second-largest oil marketing company, BPCL, has commissioned 67 outlets this year so far and is planning around 550 in the next fiscal. However, the company said all depended on factors like financial situation and board approvals.
