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Oil dealerships before 2000 may be reviewed

Pradeep Puri in New Delhi

The government may review allotments of petrol pumps and gas agencies made even prior to January 2000, and put them up for competitive bidding.

A final decision will be taken after consultations between the finance and the law ministries.

"There is a demand to review previous allotments. It will be looked into," Petroleum Minister Ram Naik told a news agency.

The cancellation of allotments made prior to January 2000 is expected to yield around Rs 55 billion, a part of which may be used by oil companies for compensating those whose allotments will be cancelled, and the rest invested in upgrading the facilities at various outlets.

Of the total amount, Rs 30 billion will go to Indian Oil Corporation, Rs 10 billion each to Hindustan Petroleum Corporation and Bharat Petroleum Corporation, and Rs 5 billion to IBP according to the number of their petrol pumps, LPG agencies and kerosene distributorships.

The government's calculations with regard to the possible revenue generation from the auction of petrol pumps, LPG agencies and kerosene distributorships are based on the fact that on January 1, 2000 there were 17,000 retail outlets for transport fuels, 6,000 LPG agencies and 6,000 kerosene distributors.

Officials say on an average, each running petrol pump will fetch Rs 2.5 million in the auction, each LPG agency Rs 1.5 million and each kerosene distributorship Rs 200,000.

This implies that the government can generate Rs 45 billion by auctioning petrol pumps allotted before January 2000, Rs 9 billion from LPG agencies and Rs 1.20 billion from kerosene distributorships.

The likely revenue from the auction of allotments made after January 2000 is still being worked out by the petroleum ministry because most of the allotments have not been translated into outlets and, therefore, may fetch a smaller price.

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