Cabinet lowers entry barrier for petrol pump business


The cabinet significantly eased entry barriers in the state-dominated petrol pump business to encourage competition from Indian and foreign firms. It also approved a revival package for state-owned telecom companies Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone NigamNSE 4.92 % Ltd (MTNL) that aims at the eventual merger of the withering former monopolies.

It also raised the minimum support price (MSP) for rabi, or winter sown, crops by 5-7% to increase rural incomes by giving a higher assured price at which state agencies buy crops such as wheat, pulses and oilseeds.

The cabinet also approved a bill to regularise unauthorised Delhi colonies on more than 175 sq km, which will give 4 million people better civic amenities and ownership rights.

It scrapped the 17-year-old entry condition of investing Rs 2,000 crore in the oil sector to be eligible for setting up petrol pumps. Any company, including those not in the oil sector, with a net worth of Rs 250 crore can retail fuel in the country, which is one of the biggest and fastest-growing oil consumers in the world.

5% Pumps in Remote Areas
The new entrants, domestic or foreign, will have to set up 5% of their pumps in remote areas, and each retail outlet must have facilities for at least one alternative fuel such as compressed natural gas, LPG, biofuel or a charging point for electric vehicles.

Several foreign companies have shown interest in the lucrative fuel retail market in the past. These include Saudi Aramco, BP Plc, Total and Trafigura, which along with Russia’s Rosneft has acquired Essar Oil’s refinery. BP already has a licence and is joining Reliance in a retail joint venture.

The decision also makes the market more competitive for the company that acquires the government’s majority stake in Bharat Petroleum Corp. Ltd (BPCL). The company has 14,803 of India’s 64,625 pumps. Others running pumps are Indian Oil CorpNSE 0.57 %. (27,702), Hindustan PetroleumNSE 0.65 % Corp. Ltd (15,440), Nayara Energy, previously Essar OilNSE -0.04 % (5,128), Reliance Industries Ltd (1,400) and Shell(145) as of June.

Telecom minister Ravi Shankar Prasad said at a briefing that the Rs 29,937 crore BSNL-MTNL revival package will have several components. It will include the raising of Rs 15,000 crore through sovereign bonds and monetising assets worth Rs 38,000 crore in the next four years, besides a voluntary retirement for employees to cut costs, he said. Pending the merger, MTNL will act as a subsidiary of BSNL.