The state-owned oil marketing companies have put on hold an ambitious proposal to expand their cooking gas marketing network by appointing 7,000 new distributors across the country.

A lot of importance was being attached to the proposal by officials associated with liquefied petroleum gas (LPG) marketing in the companies as they saw its implementation as a crucial tool to improve customer service levels. Apart from fanning into new and underserved markets, the plan involved redistribution of the customer base of some of the existing distributors. The latter was to ensure that the agencies handled customers only up to their ceiling limit, which is prescribed in terms of the number of monthly refill sales.

The decision of Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation was formally made known through a public notice on Tuesday. It came even as the deadline for submission of applications for the first lot of the distributorships was nearing. “We had advertised for 3,000 distributorships in December,” an IOC official said.

The notice said the advertisement for appointment of LPG distributors “is being kept in abeyance with immediate effect. Accordingly, no further consequential action would be taken pursuant to the said advertisement till the matter is reviewed at a later stage.” The application and the fee received would be returned to the applicants shortly, it said.

The plan to appoint 7,000 distributors in a year was a gargantuan task, the official said, adding that the process was initiated after getting the approval of the Petroleum Ministry. This would have been a significant expansion given that the number of distributors in 2001 was 6,447. In 2005, it went up to 9,000. In 2011, it crossed the 10,000-mark. As on April 1, 2012, the number of LPG agencies of the three companies totalled 11,489.

For the existing distributors, the decision is something to cheer about as they had appealed to the Ministry to take a fresh look at their viability norms. While admitting that some of the distributors had a huge customer base, sources among distributors said there were also many agencies, especially those new and set up under a special scheme in rural areas, that found it difficult to sustain.

An official of BPCL said customer service was equally important and it was necessary to trim the unwieldy customer base that some agencies had. The scope for more distributorship existed in many locations, officials said.

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