State oil marketing companies (OMCs) have permitted dealers to operate more than one petrol pump, paving way for emergence of small chains of filling stations in the country.
IndianOil, Bharat Petroleum and Hindustan Petroleum are currently in the process of appointing dealers for about 78,500 filling stations under a new guideline which allows individuals or legal entities such as companies and trusts to obtain licenses to operate more than one pump. The new rules also allow a dealer of a private oil marketer such as Reliance Industries or Nayara Energy to apply for a state pump dealership, according to industry executives.
State-run OMCs operate 57,600 pumps across the country, of which about 60% are dealer-owned, dealeroperated (DODO). The balance 40% are company-owned, dealer-operated (CODO). The third set of company-owned, company-operated (COCO) pumps, just a few hundred in number, are fully-owned and managed by oil companies. Companies partly invest in CODO stations and fully control these but let dealers manage these. In DODO pumps, entire investment in land and infrastructure is made by dealers.
The freedom to operate more than one pump is limited to the DODO category — a dealer operating a DODO pump can seek to start another DODO pump. Dealers of CODO pumps will still be bound by the rule of just one pump per family.
“Rules have been relaxed to boost entrepreneurship in the sector, which is now open to private pumps tition,” said an executive at a state oil firm. “If someone has the willingness to expand, and the capital to invest, they should be given a chance to do so.”
In due course of time, this can let more entrepreneurial dealers acquire a chain of filling stations, and dominate micro-markets, an industry executive said. “But how it will really pan out will depend on the course the oil industry takes, and how remunerative it is to remain in the fuel retailing business,” he said.