The Hindu Business Line : Govt asks OMCs to undertake survey of retail outlets

Standardising service
Rapid expansion has led to drastic cut in average throughput per outlet.
Reduction in volume has eroded viability of pump operations leading to malpractices such as adulteration.
Quality of customer service has deteriorated.

New Delhi , April 27

The Government has directed state-owned oil marketing companies (OMCs) to undertake a survey of the rapid increase in retail outlets (ROs) commissioned by them and identify the outlets selling less than 200 kl per month. The OMCs have been asked to come out with a blue print for remedial measures, an official communiqué said, adding that pending this, the OMCs have been directed not to continue indiscriminate expansion of retail outlets for the time being.

This is to ensure a healthy retail network of OMCs providing standard service to the customers, the statement said, and added that the exercise is expected to be completed within the next four months. The rapid expansion of the number of retail outlets from 18,848 as on April 1, 2002, to 29,951 as on March 31, 2006, an increase of 59 per cent in just four years, is set to have led to a drastic reduction in the average throughput per outlet, the statement said.

It had taken OMCs over 30 years to set up 18,848 retail outlets. The per retail outlet volume, which was a healthy 275 kl per month five years ago, has declined to around 140 kl per month now.

Besides, increased expenditure for operating retail outlets and the reduction in volume have considerably eroded the viability of pump operations, leading to rising incidence of sickness and providing a fertile ground for malpractices such as adulteration by some pump operators.

This has resulted in deterioration in the quality of service to customers at retail outlets.

In fact, the Federation of All India Petroleum Traders (FAIPT) has been making representations to the Government about the indiscriminate expansion by OMCs and increasing non-viability of their operations. The declining performance of OMCs has come in for criticism from different quarters, which include several Parliamentary Committees.

There is also concern that OMCs have been engaged in unhealthy competition among themselves even as the private sector, which entered the market just a few years ago, appears to have been able to wean away a large section of OMC customers and corner a huge market share.

The Ministry of Petroleum and Natural Gas has expressed its concern to OMCs on several occasions on the issue.