Govt eases entry to fuel retail for private and foreign companies

October 26, 2019: The Cabinet Committee on Economic Affairs (CCEA) led by Prime Minister Narendra Modi has opened the retail business of petrol and diesel for private and foreign players by lowering entry barriers. The ‘Review of Guidelines for Granting Authorization to market Transportation Fuels’ that got approved on Wednesday marks a path breaking reform in the India retail fuel marketing.

The policy change that wants more investment in the sector expects better competition, efficient services to customers, new direct and indirect employments, installation of new technologies and digital payment services in the increased number of retail outlets.

The companies now only need a ‘minimum net worth of Rs 250 crore’ instead of ‘Rs 2000 crore prior investment’ required by the 17-year-old existing policy that came to existence in 2002. This now allows non-oil companies to enter the business as the condition of ‘prior investment in the oil and gas sector’ has been removed. Companies now also have the flexibility to form joint ventures and subsidiaries for the authorisation.

The opening up also comes with two conditions: first, the companies have to install facilities for at least one new generation alternate fuel, like CNG, LNG, biofuels or electric charging at the retail outlets within 3 years of its operation. Second, the entities also have to set up atleast 5 percent of its outlets in the remote areas.

The PIB release read: “This marks a major reform of the guidelines for marketing of petrol and diesel. The existing policy for granting authorization to market transportation fuels had not undergone any changes for the last 17 years since 2002. It has now been revised to bring it in line with the changing market dynamics and with a view to encourage investment from private players, including foreign players, in this sector. The new Policy will give a fillip to ‘Ease of Doing Business’, with transparent policy guidelines. It will boost direct and indirect employment in the sector. Setting up of more retail outlets (ROs) will result in better competition and better services for consumers”