HEYDAYS

Mumbai, Sept 9: If everything falls into place soon, you could soon be able to tank up your car at a petrol pump owned by ExxonMobil, Texaco or Petronas before hitting the highway.

The ministry of petroleum and natural gas has agreed to scrap a requirement for a minimum capital investment of Rs 2,000 crore by companies that wish to retail petroleum products in the country.

The condition was imposed in 2002 when the private sector was allowed to start retailing petroleum products.

The government had ruled that marketing rights would only be granted to those companies that either invest or propose to invest at least Rs 2,000 crore in exploration and production, refining, pip-elines, or terminals.

The move was designed to allow only serious players to set up petrol pumps and service stations. The government had the power to conduct a valuation of the investments made. The regulations also stipulated that companies seeking petroleum marketing rights would have to fulfil the capital investment condition within a period of 10 years from the date they were authorised to market transportation fuels.

The investment condition deterred a number of foreign players from entering petroleum retailing. At present, Shell is the only foreign company to have a retail licence in India. It has less than 40 retail stations. Industry has been lobbying the government for over two years to relax the condition but it is only now that the petroleum ministry has decided to act on the suggestion.

It first asked the Planning Commission for its views on the demand. The commission said the condition should either be scrapped or relaxed.

Yojana Bhavan said the capital investment condition could be scrapped as there were other ways to ensure that no fly-by-night operators entered the arena. Sources said the ministry agreed to scrap the condition at a recent meeting in the capital. It, however, did not set a time frame for doing so.

Industry experts feel that if the requirement is done away with, more foreign companies can start retailing petro products. “It is generally observed that when a country’s economy starts doing well, there is a good demand for such products,” said an official from one of the private sector oil companies.

However, there are some who feel that the removal of the condition will not automatically lead to more private sector companies entering petroleum retailing. Sources here said the lack of a level-playing field vis-à-vis public sector oil companies could still deter private sector companies. “Globally, retailing of fuel is a profitable business. But in India, the government controls prices of fuel and also provides subsidies only to the public sector oil companies,” said a senior official with a leading private sector oil company.