A proposal of the public sector oil marketing companies to expand their cooking gas distribution network, which was put on hold earlier this year, is being revived.
An indication of the plan to appoint close to 7,000 distributors being pursued with certain changes was available when Indian Oil Corporation Director-Marketing M. Nene said the companies were scheduled to have a meeting on Wednesday with the Petroleum Ministry on the issue.
The meeting, which he referred to as final, would work out how many new distributorships the companies should set up and the basis for that. The companies, he added, were likely to base their case for the expansion by taking into account the Census 2011 data as against those of Census 2001, “which we had taken last time.” Mr. Nene was interacting with presspersons after the inauguration of the Indian Oil-Petronas LPG Import-Export Terminal in Ennore, near here, on Tuesday.
Noting that the companies had “wanted to go in a very big way,” with regard to increasing their liquefied petroleum gas (LPG) distributorships, he said the proposal was to add close to 6,000-7,000 agencies. The plan was put on hold because “there was a change in the [Petroleum] ministry and the new minister wanted to understand how we arrived at this number [of new distributors]. “Because ultimately whatever you do it is he who has to reply… he wanted to understand… which has been well explained to him,” he said.
The expansion plan, he added, was focussed on whether the distributorship would be economically viable and result in enhanced customer service and satisfaction.
The oil company decision to keep the new distributor appointment process in abeyance also followed opposition from the existing LPG agencies.
The distributors had appealed to the Ministry to take a fresh look at their viability norms.
Regarding the retail outlet expansion plans, Mr. Nene said there had been a shift in the policy stipulating that the total investment would have to be made by the dealers. The oil companies would be investing only where the petrol bunk is company-owned and company-operated. On whether the response from prospective dealers would be the same, he said: “Obviously, there are opportunities… there is potential.” With the under-recoveries on petrol and diesel getting covered and once there is competition the fittest will survive.
On whether competition from private players would increase with deregulation of petrol and diesel prices, he said IOC does see threat to its volumes as “we carry maximum market share and are most vulnerable too.” But it would not be easy for the private players to take market share as they did in 2006 as “we have done our homework [on] how to overcome [competition].”
