State-run oil companies are in the process of issuing letters of intent (LoI) to prospective dealers for setting up new outlets in Tamil Nadu. Each company has issued letters for about 300 outlets, of which at least a third are in the rural category.
The State has around 4,800 fuel outlets and the companies in 2016 advertised for 5,125 locations with an investment of around ₹1,300 crore. Neighbouring Puducherry was to get around 140 new outlets.
“The selection process was kept on hold due to a court stay. However, after it was vacated, LoI are now being issued. Indian Oil issued 248 letters of intent till mid-February. It planned to set up 2,615 new retail outlets, for which applications were called and we received response for 2,277 locations,” said P. Jayadevan, executive director, Indian Oil Corporation Ltd. (IOCL).
Sources in the Hindustan Petroleum Corporation Ltd. (HPCL) said that 35% outlets were to come up in rural areas, 20-25% along highways and the remaining in urban areas.
“We are not just looking at high-volume centres like Chennai, Tiruvallur, Kancheepuram, Madurai and Coimbatore, but also at remote places. Both ‘A’ sites, where investment will be more by the companies, and ‘B’ sites, where the dealer will have to invest more, are to come up,” an official said.
Process still on
Sources in Bharat Petroleum Corporation Ltd. said the process of issuing LoI was still on. “Though we have chosen sites, some applications are getting rejected,” the official said.
But dealers have been objecting to oil companies planning to set up such a large number of outlets. “Only a small portion of bunks are high-volume outlets. There are many in the rural areas and even outside the urban limits that barely scrape by due to high-running costs. Then there is also competition from private brands,” said a dealer.
