Petrol Pump Business No More A Crowning Glory In India

BANGALORE: Gone are the days when possessing or even starting a petrol pump was considered an attractive business at the cost of minute risk, sustainable cash along with a heap of prestige.

With the financial year that came to an end in March, IOC and BPCL that operate two-thirds of India's filling stations among themselves received half of around 24,500 dealerships that wished to appoint. While HPCL received 56 percent for 9,800 locations, IOC got only 43 percent response for 14,700 locations, reports ET.

The proliferation of pumps brought down the average volume at filling stations. So much so that it left fuel retailing companies like Indian Oil Corporation  (IOC) and Hindustan Petroleum Corporation (HPCL) under pressure for finding new dealers. 

"A sluggish economy slowed down diesel growth during the last fiscal, and with so many retail outlets already in place, the market seems headed towards saturation for the time being," said a senior executive at IOC.

The past governmental laws had curbed the freely priced fuel as they didn’t want it to fuel up inflation and wreck economy. They then handed the state dominance to three state-run firms—IOC, HPCL and BPC, which controlled 95 percent of the petrol pumps. 2002 irregularities of petrol and diesel prices brought forward private players Reliance Industries, Essar  and Shell. However they were forced to shut down within years after crude prices increased rapidly.

Nonetheless, the setback of the deregulation altered the dynamics of fuel retailing in India. The rigid competition from private players with technology, quality and convenience are now capable of attracting massive retail buyers as well as seize a big market share. Reliance single handedly had 14.3 percent share of high-speed diesel market in 2006.

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