The Hindu Business Line : PSU oil marketing cos seek changes in dealership norms

Public sector oil marketing companies have sought amendment in the existing norms for award of dealership for setting up a large number of `standalone auto-LPG outlets' in the country. Proposals in this regard have already reached the Union Petroleum and Natural Gas Ministry.

By setting up only auto-LPG dispensers in the existing petrol pumps, PSUs have built a network of just 183 dispensers across the country since 2001.

This is irrespective of the very high growth demand for auto LPG — 74 per cent growth in sales during the first 10 months of this fiscal — as an economically viable greener alternative of petrol vis-à-vis free-pricing mechanism helping companies earn a decent margin of Rs 1,400 per tonne and launch of LPG variant models by leading automakers.

According to sources, the existing norms make it mandatory for oil PSUs to appoint 50 per cent dealers from the reserved categories and economically weaker sections of the society. "This often leads to a situation whereby we appoint dealers without much entrepreneurial skill. Arguably though, this eventually adds to our problem of low per pump throughput. Also we bear almost the entire cost of setting up such pumps," said a senior official with a public sector refiner.

ALDS Equipment

"Such policies will spell disaster on our financials for opening standalone auto LPG dispensing stations (ALDS)," the official said. According to him, considering the fact that in the first phase ALDSs will mostly be set up in the cities — which has maximum concentration of petrol driven vehicles — with prohibitive land costs, marketing companies seek a change in business model.

"We look forward to appoint dealers who will offer land and we will offer the equipment," he said adding that even this model, if approved, would cost the marketing companies a fortune, as the average cost of ALDS equipment is more than double that of a petrol and diesel dispenser. In the absence of domestic manufacturer ALDS equipment cost Rs 45 lakh on an average.

While awaiting the decision of the Centre on their plea for a level playing field, the companies are finding it extremely difficult to set up ALDS in the existing petrol pumps in the cities. "Most of these pumps were set decades back when safety norms were less stringent. Accordingly, they are located on comparatively smaller pieces of land, which are unsuitable for setting up LPG dispensers. Naturally we have to open new outlets for increasing availability of auto-LPG," the sources said.

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