Financial Daily from THE HINDU group of publications
Tuesday, Aug 03, 2004
Marketing - Retailing
Shell set to get permit for petrol, diesel retailing
New Delhi , Aug 2
THE Government is set to allow Shell India Pvt Ltd to set up 2,000 retail outlets in the country for marketing petrol and diesel. This follows the multinational oil and gas major fulfilling the investment criteria for obtaining the market authorisation permit to sell transportation fuels.
Around three months ago, Shell cleared the investment requirement of Rs 2,000 crore in the country by way of completing a good part of the $650-million 2.5 million- tonne per annum LNG regassification terminal at Hazira, Gujarat.
"The company was awarded a conditional licence last year subject to their investing Rs 2,000 crore in petroleum assets in the country.
"Now that they have, we will be shortly awarding them the permit to set up 2,000 retail outlets in line with their proposal," a Government official said.
Since deregulation of the petro-marketing business on April 1, 2002, the Government has given the market authorisation permit to four companies.
These are Reliance Industries Ltd, Essar, Numaligarh Refineries Ltd (NRL) and Oil and Natural Gas Corporation (ONGC). While Reliance has set up around 100 retail outlets, Essar has set up roughly 70 outlets.
The threat of entry of the new players into the market has forced the existing public sector oil marketing companies - IOC, BPCL, IBP and HPCL to plunge into the marketing business with renewed vigour.
This has resulted in the throughput of fuels per pump dropping significantly.
While Reliance has set up the outlets to find a market for its 31-million-tonne refinery's produce, Essar has been importing products pending the commissioning of its refinery at Vadinar sometime in the future. ONGC has been lobbying with the Government to enable it to set up a non-public sector marketing company, though in vain.
It is into this market that Shell is now stepping into. According to the Shell India Chairman, Mr Vikram S. Mehta, the first retail outlets could come up in the second half of the current year.
As per Government norms, the company will require to set up 11 per cent of its proposed retail outlets in far-flung areas. To regulate this commitment, the company will require an agreement with the Government.
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