Karnataka petroleum dealers body asks new entrants to ensure viability before venturing into business

Our Bureau Mangaluru | Updated on January 13, 2020 Published on January 13, 2020

“The new entrants to petroleum retailing business should conduct a thorough market study before venturing into the field rather than simply making investments in the sector,” said Anand Karnad, General Secretary of Karnataka State Federation of Petroleum Dealers.

Addressing presspersons in Mangaluru on Monday, Karnad said that many of the new entrants to this business are approaching the federation with grievances on the viability of their new projects. Let the new entrants conduct a market study and venture into the petroleum products retailing business, only if they think their project will be viable.

Quoting the complaints of some of the new entrants to the petrol retailing business, he said the oil marketing companies (OMCs) ask them to start the business with ₹35 lakh investment. With that investment, the OMCs provide them two tanks and two dispensers (one for petrol and another for diesel). The person entering this business will have to spend on other allied infrastructure to set up a retail outlet. This will lead to a total investment of around ₹1.50 crore.

Stating that the country has around 56,000 retail outlets, he said the government had called for applications to open another 68,000 retail outlets in the country a year ago. Some of those who got licences to do this business are now approaching the federation with their problems on investments and the viability of their projects.

He also said that the increase in the number of retail outlets would also lead to the decrease in the throughput of the retail outlets in the country, affecting their business even further. In fact, some private OMCs are rapidly expanding retail outlets in rural areas.

Karnad said, the government fixed the throughput of a retail outlet at 170 kilolitres per month in 2012. Considering the rapid expansion of retail outlets in the country, this throughput may reach 100 kilolitre per retail outlet per month in two years.

P Vaman Pai, president of the Dakshina Kannada and Udupi District Petroleum Dealers Association, said that the association will host a state-level conference of petroleum dealers at Udupi on February 29 and March 1. All the matters related to the sector will be discussed in that conference.

“Apart from the top executives of OMCs, around 1000 dealers from all over Karnataka are expected to attend the conference,” he said.

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Published on January 13, 2020
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