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Swipe cards at petrol pumps soon

Hemangi Balse & Palakunnathu G Mathai | May 23, 2003

When you drive into a petrol pump some months down the road, you'll probably insert a smart card into a device and punch in the amount of petrol you want to buy.

The software behind the card will check your bank account to see whether you can pay for the petrol before the petrol station is instructed to release the petrol.

What is more, you'll get a combined bill for everything you buy, including whatever you buy at the adjacent oil company-owned store (today you have to pay separately for this).

Thanks again to software, the chances of your petrol being adulterated will be slim. You'll also perhaps be able to zip through a petrol station in double quick time.

Faced with impending international competition, India's state-owned and private oil companies are embarking upon an unprecedented automation drive at petrol outlets and supply chains (real-time monitoring of every step of the supply process).

Last month, the state-owned Hindustan Petroleum Corporation Ltd invited global tenders to automate 500 petrol stations by year end.

Says a senior HPCL official: "We have already drawn up a detailed plan in consultation with international petroleum consultants."

The public sector IOC too wants to automate 250 petrol stations in the first phase (up to 1,000 stations by year end) and plans on spending Rs 200 crore (Rs 2 billion) on this.

Says a senior IOC official, "Costs are not a constraint, as we have to gear up for competition from private oil companies such as Reliance, Essar and Shell."

The 250 stations will sport the Chairman's Club moniker (IOC calls the entire project 'Operation Everest').

Reliance Industries has tied up with the Ogden, Utah (US)-based Flying J, an integrated petroleum company, to automate its retail outlets.

A Reliance spokesman declined to comment on the matter. But industry sources say Reliance has already sent staff for training to Flying J.

"Flying J has expertise in setting up fuel stops along national highways. Reliance will draw on this expertise to cater to the needs of long-distance truckers in India," adds an industry source.

Reliance apparently is looking at 'real time monitoring of stocks from the refinery to customers' vehicles.'

It is considering automating all its retail outlets, whether a small one in the city or big service stations on a city's outskirts or stations on the national highways.

IBP too says it is exploring the possibility of automating its stations. Raj Agnihotri, president of the US-based ProcessBiz Technologies Inc, says IBP is talking to his company on this.

In March 2002, IOC had 7,870 retail outlets, HPCL had 4,729 service stations and Bharat Petroleum Corporation Ltd had 4,711 retail outlets.

While only a small percentage of these will be automated initially, it nevertheless represents a huge business opportunity -- a Rs 1,000 crore (Rs 10 billion) market, according to Agnihotri.

Sensing the opportunity, the Netherlands-based Petroplus International is pitching to sell unmanned filling stations under the Tango brand to the oil companies.

So far, ProcessBiz Technologies has automated three petrol stations in Mumbai: IOC's Top Gear on Warden Road, another IOC petrol station at Napean Sea Road and HPCL's Bandra petrol pump, which will go live in two months. IOC has, in fact, issued smart cards at one of its outlets.

IOC officials say they have already received a "very positive" response from its pilot projects, for which it has roped in McKinsey & Co, the consultancy firm. IOC has also launched dealer awareness programmes to train dealers in automation.

But the oil companies, however, say the three outlets Agnihotri lists are only partially automated -- and thereby hangs a tale.

Automation involves much more than the petrol pumps -- it also involves back office operations. Automating these will benefit the oil companies hugely.

They'll get real-time data on retail sales and can better manage their inventory levels (for example, they'll be able to know whether petrol levels are low at a station) and they'll be able to reconcile stocks and sales.

Secondly, they'll be able to check adulteration -- if a tanker delivers petrol at a certain time and two hours later the level of petrol in the station is much higher, they'll know that the petrol has been adulterated.

Thirdly, as Agnihotri points out, automation will help the oil companies later if there are price wars -- they'll know which petroleum products' sales are moving slowly and will be able to offer discounts on it.

Still, automation is unlikely to usher in unmanned petrol stations. The state-owned oil companies won't be able to sack petrol station attendants, though they have the option of making their outlets self-service ones at night.

Private oil companies like Reliance can open unmanned stations, since they don't have the legacy of employees. But even Reliance won't plump for unmanned stations.

A slick affair

  • HPCL and IOC to automate 500 and 1,000 stations, respectively, by the year-end.
  • Automation will help oil companies get real-time data on retail sales and manage inventory levels better.
  • Move will also curb adulteration.
  • Automation is unlikely to usher in unmanned petrol stations.


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