Fuel retailing in India is set for a major overhaul as the government is planning to allow foreign energy giants such as Saudi Aramco, Total and Trafigura, as well as supermarket chains to enter into the segment.
Currently, companies are required to make an investment of at least Rs 2,000 crore in exploration, production, refining, pipelines or terminals in India in order to bag a licence to market petrol, diesel and jet fuel.
The oil ministry has prepared a Cabinet proposal to scrap the nearly two-decade rule, a business daily said citing a source aware of the development.
The oil ministry is consulting other ministries such as finance, commerce and law for the proposal that has adopted most of the key recommendations of an official panel that was constituted in March to review the 2002 guideline on grant of transport fuel marketing licence, said the person. The panel submitted its report in May this year.
According to the business daily, the official panel had favoured doing away with the minimum investment requirement by companies seeking an oil marketing licence. Rather the panel suggested to introduce a minimum net worth for licence seekers. It also suggested opening up the sector to non-oil companies, imposing strict timelines for setting up petrol pumps, and penalties for not meeting the rollout plan.
Worth mentioning here is that the minimum investment rule has been the biggest barrier for foreign entities aiming to enter into the rapidly expanding fuel market in India. Demand for petrol, diesel and jet fuel has grown by 8%, 3% and 9%, respectively, in 2018-19.