Financial Daily from THE HINDU group of publications
Saturday, Mar 09, 2002
Industry & Economy - Petroleum
Government - Policy
Rs 2,000-cr investment norm set -- Petro marketing thrown open to private sector
NEW DELHI, March 8
AFTER a span of 26 years, the Government has finally opened the gates for more players, including private sector companies, to market petrol and diesel across the country.
The announcement of the opening up of marketing rights marks an end to the exclusive right accorded hitherto to HPCL, BPCL, IOC and IBP to market transportation fuels.
According to the marketing guidelines unveiled here on Friday, companies proposing to enter this business should either have invested or are committing to invest a minimum of up to Rs 2,000 crore in the sector over a 10-year period.
Three segments of players would automatically become eligible for marketing transport fuel, according to the Petroleum Minister, Mr Ram Naik.
Among the oil PSUs, the new players eligible to market transportation fuels through retail outlets are Oil and Natural Gas Corporation, Gas Authority of India Ltd, Oil India Ltd, Kochi Refineries Ltd, Chennai Petroleum Corporation Ltd, Bongaigaon Refineries and Petrochemicals Ltd and Numaligarh Refineries Ltd.
In the private sector, Reliance Petroleum Ltd and Essar Oil Ltd, which are in the refinery business and Cairn Energy, which is in the exploration business, meet the investment norms.
Mangalore Refineries and Petrochemicals Ltd fulfil the eligibility criteria in the joint sector segment.
The eligibility norms for allowing companies to market transportation fuels were cleared by the Union Cabinet early this week. Following the Cabinet decision, Reliance had applied for marketing rights of transportation fuels.
A bank guarantee of Rs 500 crore will be sought for enforcing the investment norm for players proposing to invest Rs 2,000 crore.
The investment will have to be channelised towards creation of assets in refining, exploration and pipelines. Investments in retail outlets will not be counted for this purpose.
The guidelines also explicitly prohibit poaching from the existing network of public sector undertakings.
In order to enter the business, interested companies will have to obtain an authorisation from the Government till such time a regulator is set up for the sector.
To obtain an authorisation, interested companies will be required to mandatorily service non-remunerative areas under the `marketing service obligation' (MSO) clause, besides complying with the `retail service obligations' (RSO).
Under the MSO, eligible companies will need to set up retail outlets in remote areas and low service areas in proportion to the existing percentage of retail outlets in these two areas at the beginning of the year.
With regard to the RSO, companies will have to maintain minimum petrol and diesel supplies at all times.
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