The Hindu Business Line : ONGC to enter petrol retailing by fiscal-end

OIL and Natural Gas Corporation will enter the petroleum retailing business this fiscal. In the first phase, the company will open retail outlets under the ONGC brand name to be followed by outlets of Mangalore Refinery and Petrochemicals Ltd (MRPL).

ONGC and MRPL together hold licences for 1,600 outlets, including 1,100 of ONGC alone.

Talking to Business Line, Dr A.K. Balyan, Director (Business development and joint venture), said that in the first phase the company would open outlets in metros to be followed by semi-metros.

The first petrol pump, however, is likely to come up in Mangalore.

"We will enter retailing with a difference," Dr Balyan said, adding that the company had not been able to enter the sector in the last fiscal. "We are surely coming up in 2004-05," he emphasised.

Stating that acquisition of land was proving to be the biggest hurdle, he said that the company was in the midst of acquiring premium locations in metros and semi-metro cities.

Asked whether the first set of outlets would be run through the company-owned company-operated (COCO) model, he said that while land was being acquired by the company, the detailed business plan was yet to be worked out.

"We are taking the utmost care in finalising details to strike a balance between consumer satisfaction and commercial viability of the retail outlets," Dr Balyan said. "In any case, we do not foresee building up a large retail chain as it would require equivalent investment and as well as time to break even."

Meanwhile, the company is expecting its proposal to buy out HPCL's 17.4 per cent stake in MRPL to be approved by the Union Cabinet soon. "The approval was delayed due to the change in government at the Centre. We are now expecting it any time," said Mr Subir Raha, Chairman and Managing Director of ONGC. The company had bought the controlling stake of 37.4 per cent in MRPL from the A.V. Birla group in March 2003.

`We're for a mega merger'

ONGC is all for a mega merger of public sector oil and gas companies as proposed by the Union Oil and Natural Gas Minister, Mr Mani Shankar Aiyar. ONGC believes that the existing situation is against the global paradigm of the oil and gas business.

Talking to the media here, Mr Subir Raha, Chairman and Managing Director, ONGC, said: "Every major oil and gas company in the world was vertically integrated. Therefore, separate companies managing different business profiles do not conform to the global paradigm," he added.

As vertical integration was a compulsion, "every other company in the field is now trying to do the same thing, adding up costs, especially when the owner is common," he said.

He said that what was even more important was that "in a global economy you need global size." But the situation today was one where companies under the same group were competing among themselves to achieve the same goal. This needed to be reviewed, Mr Raha said.

On the mega merger issue, the ONGC chief said that different models were available and "we need to work out which model is most appropriate."

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