Invest $440m and open up a chain of petrol pumps

Vol 5, PW 5 (25 Apr 01) Midstream & Downstream

Can it be true Private sector companies might be allowed to set up petrol pumps before April next year, when the government says it will abolish the 'Administered Pricing Mechanism', which fixes the price of petrol, diesel, kerosene and LPG.

This startling revelation comes in a report by Naresh Narad, Additional Secretary, and the second most powerful bureaucrat in the Indian oil ministry, entitled: 'Report of the Group on Deregulation of Marketing of Controlled Petroleum Products'. We understand Narad's recommendations will go to cabinet by the end of April for approval.

Key to note is that Narad does not recommend 'free for all' entry to anybody that wants to open a petrol pump. No.

He clearly lays down the familiar Rs2,000cr ($440m) minimum investment in oil and gas infrastructure as a pre-requisite. "Private sector companies, which fulfil the condition of investing or proposing to invest Rs 2,000cr ($440m) in activities of exploration and production, refining, pipelines or terminals, may be authorised to market transportation fuels," reads the report.

Reliance Petroleum and its 27m t/y refinery at Jamnagar is the most obvious beneficiary of the new guidelines.