BPCL plans to expand its fuel retail network by two-thirds
Bharat Petroleum Corporation Limited (BPCL) plans to expand its fuel retail network by 14,273 pumps, which is almost two-thirds of its current network, to increase its share in the rapidly growing domestic fuel market. The company, which operates 25% of the country's petrol pumps, has recorded a half-yearly profit of 19,052 crore for the April-September period, which is a new record for the company. BPCL is moving forward with fuel network expansion because the demand for petrol and diesel is growing due to new vehicle sales and an expanding economy. The national consumption of both diesel and petrol has increased by 6% this financial year.
VRK Gupta, the director of finance at BPCL, recently announced that the company has released an advertisement for 14,273 new retail outlets across India. The move aims to increase their market presence and capture more customers. However, the actual construction of the new outlets will depend on the dealers' interest, as well as the commercial viability of the sites. Over the past five years, India's fuel retail network has grown by almost 40%, with state-run companies leading the way in aggressive expansion, while private players have been more cautious. Indian Oil Corporation operates the highest number of pumps, with about 36,700, which accounts for approximately 42% of the total. Meanwhile, BPCL and HPCL operate a similar number of pumps, roughly 21,300 each. However, BPCL sells more diesel and petrol on average from its pumps than HPCL.
BPCL has had a significant rise in profits this year thanks to a combination of factors. These include the use of cheaper Russian crude oil, higher refining margins, and a freeze on domestic pump prices. The company's ability to process cheaper crude and make big switches between different products has also helped to boost refining margins. In the second quarter, Russian crude accounted for about 30-40% of the total crude processed. The increased profits have aided in reducing borrowings at state refiners.
BPCL's gross borrowings have decreased by 5,000 crore on a sequential basis to 22,500 crore. However, in the next few years, borrowings are expected to increase significantly as capital expenditure is set to expand. The company plans to spend 150,000 crore over the next five years, with 10,000 crore being allocated for this year. The capex will be divided into three parts, with one-third of the amount going towards adding refining and petrochemicals capacity. Additionally, 26,000 crores each will be allocated for upstream, city gas, and marketing infrastructure.
