Saudi Aramco, France’s Total and oil trader Trafigura could be the immediate beneficiaries of a change in the licence rule.
The oil ministry has readied a Cabinet proposal to scrap the nearly two-decade-old rule of restricting the licence to market petrol, diesel and jet fuel to companies that have invested or propose to invest Rs 2,000 crore in exploration and production, refining, pipelines or terminals in the country, said a person with knowledge of the matter.
The ministry is consulting the finance, commerce and law ministries for the proposal that has adopted most of the key recommendations of an official panel that was constituted in March to review the 2002 guideline on grant of transport fuel marketing licence, said the person. The panel submitted its report late May.
India’s Fuel Market Expanding Rapidly
The panel had favoured ending minimum investment by companies as a licensing condition while introducing minimum net worth bar for licence-seekers. It also suggested opening up the sector to non-oil companies, imposing strict timelines for setting up petrol pumps, and penalties for not meeting the rollout plan.
The minimum investment-rule has been the biggest barrier for foreign players aiming to grab a share of the rapidly expanding fuel market in India. Demand for petrol, diesel and jet fuel has grown by 8%, 3% and 9%, respectively, in 2018-19.
Saudi Aramco, France’s Total and oil trader Trafigura could be the immediate beneficiaries of a change in the licence rule. Saudi Aramco recently wrote to the oil ministry that it’s keen on fuel retailing in India, according to a person familiar with the matter. The company though hasn’t submitted a formal application and is probably waiting for the rules to change, the person said.
Saudi Aramco CEO Amin H Nasser had told ET last year that the oil behemoth won’t enter fuel retailing without its own manufacturing hub in India. The company is in talks with Reliance Industries for a stake in the latter’s refining unit. It is also partnering state-run firms for a proposed 60-million-tonnes a year refinery.
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