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BPCL dealers seek exit window before privatisation

NEW DELHI: Bharat Petroleum Corporation Ltd (BPCL) petrol pump owners have sought the provision of an exit window before India’s second-largest state-run oil refiner and fuel retailer is privatised.
In a presentation to the parliamentary standing committee on petroleum earlier this month, the dealers have suggested a minimum lock-in period after privatisation to protect willing dealerships against cancellation by BPCL’s new owner.
The All India Petroleum Dealers Association, an umbrella body of petrol pump owners, told the committee headed by BJP’s Lok Sabha MP Ramesh Bidhuri the petrol pump land should be de-leased immediately in case a dealer wants to exit the business or end association with BPCL.
BPCL has 15,402 retail outlets, accounting for 29% of petrol and diesel sold in the country. “Land lease of many sites have expired but the company refuses to let go,” one dealer said on condition of anonymity.
There are 64,625 petrol pumps in the country. Only 669, or 1% of these, are owned and operated by the retailing companies. The remaining pumps are categorised into ‘CODO’ (company-owned, dealer-operated), which forms the bulk of the pumps, and ‘DODO’ (dealer-owned, dealer-operated).
In CODO, the dealer leases the land to the company, which makes the investment. In DODO, the dealer provides the land and also invests in infrastructure.
CODOs make up the bulk of the pumps in the country. Refusal to let go of the land appeared to be a common grouse of petrol pump owners against all three state-run fuel retailers.
“But for the fear of companies refusing to de-lease, many of us would today prefer to put the land to more profitable commercial use,” another dealer said.
In case of LPG (household cooking gas) service, the government has decided to shift all seven crore consumers of BPCL to a proposed SBU (special business unit to be created by the company to ensure they continue to get the applicable subsidy.
The government has three suitors for its 52.98% stake in BPCL. The metals-to-mining Vedanta group, investments funds Appollo Global and I Squared Capital’s Indian arm Think Gas have submitted EoIs (expressions of interest). Due diligence is currently going on.
Till now BPCL operated four refineries — in Mumbai (Maharashtra), Kochi (Kerala), Bina (Madhya Pradesh) and Numaligarh (Assam) with a combined capacity of 38 million tonnes per annum, or 15% of India’s total refining capacity of 249 million tonnes. It recently the Numaligarh refinery stake to a consortium of EIL and Oil India as the unit was not part of the disinvestment process.
The company also has 6,011 LPG distributorships and 51 LPG (liquefied petroleum gas) bottling plants and a fifth of the 250 aviation fuel stations in the country.

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