Shell looking for location to set up first petrol pump

Vol 7, PW 5 (21 May 03) People & Policy

SHELL IS waiting until it finds a suitable location to set up its first petrol pump in India before providing the required Rs500cr bank guarantee to the government.

"There's no point in sending a bank guarantee until we identify the precise spot where we want to build our first outlet and that's what we are doing now," a source tells this report. "Otherwise it's only the banks that would benefit." Shell has identified Bangalore to launch its all-India network of petrol pumps and has appointed expatriate Jan Lacki as its 'Retail Network Manager India'.

On 12th May oil minister Ram Naik released a statementconfirming the government has, "approved a proposal to grant authorisation to Shell India Pvt. Ltd for marketing transportation fuels in the country.

Crucially, it adds: "Authorisation is subject to the company furnishing a Bank Guarantee to the government of Rs500cr towards fulfilling the commitment to invest Rs2, 000cr in the building of infrastructure in the hydrocarbon sector. A ministry source confirms that a retail licence will not be issued to Shell until it hands in the bank guarantee and that until now, none has been received.

"The bank guarantee will be returned to them the moment they fulfil the minimum investment criteria." On 7th March, Shell India chairman Vikram Singh Mehta submitted a two-page letter to Shastri Bhawan alongside a completed application form for a retail licence. Singh said Shell's retail fuel marketing venture would be through a "separate subsidiary" to be incorporated in time.

"We also seek the right to induct any suitable joint venture partner into this new company," he adds. On 16th March last year the oil ministry published guidelines setting out the conditions and procedures for receiving a licence.

Most important among them is a commitment to invest Rs2, 000cr ($416m) in a hydrocarbon-related project, something Shell comfortably fulfils with its construction of an LNG terminal at Hazira.