The government has approved a proposal to allow the Indian subsidiary of Shell to market transportation fuels in India, Minister of Petroleum and Natural Gas Ram Naik said on Monday.

The multinational, which was nationalised in India in 1972 and became Bharat Petroleum, makes a comeback after more than 30 years.

The authorisation, however, is subject to the company furnishing a Rs 500 crore bank guarantee to the government towards fulfilling the commitment to invest Rs 2000 crore in building infrastructure in the hydrocarbon sector.

The company will be required to set up 11 per cent of its retail outlets in far-flung areas and sign an agreement with the government indicating year-wise targeted completion schedule.

"Our market is ever growing and offers opportunities for even big players like Shell," Naik said. "The decision goes a long way toward fulfilling the government's goal of bringing in more players in the marketing of transportation fuel so that the consumers have a wider choice of quality products and services."

In addition to the present strength of about 20,000 retail outlets run by the public sector, the government has already granted marketing rights to Reliance group (5849 outlets), Essar Oil (1700) ONGC (600) and Numaligarh Refinery (510) also on the condition that they create more infrastructure in the hydrocarbon sector.

Shell plans to set up around 2000 retail outlets and their preferred source of supplies will be domestic refineries.