Over 4 lakh applications received for 78,500 petrol dealerships, Auto News, ET Auto

Over 4 lakh applications received for 78,500 petrol dealerships, Auto News, ET Auto
New Delhi: More than four lakh applications have come in for 78,500 dealerships that staterun oil companies are seeking to appoint across the country, a sign that Indian entrepreneurs still love the the idea of running filling stations, a business that offers sustained cash flow at little risk.

A little less than half of all locations advertised for petrol pumps are by IndianOil, with the balance being split between Bharat Petroleum and Hindustan Petroleum.

About 95% of all locations advertised have received applications — 56% received multiple applications and 39% attracted single application — mainly due to the relaxation of rules with respect to land ownership and financial capability of applicants. In the last round in 2014-15, when only those with certain financial capability and with control over land could apply, just half the locations advertised received applications.

Despite high initial interest, the final tally of pumps that may eventually come up could still be low due to difficulties of arranging land and regulatory clearances. The success rate was barely 17% in the last round. Even at this rate, more than 13,000 pumps may be set up, which would mean a boost for equipment suppliers, transporters and jobs. A dealer may take about three years to open a pump after obtaining a license to do so due to enormous time consumed in getting multiple regulatory clearances.

Companies now have their own guidelines for appointing dealers. The government does not impose its rules on the ground that the sale of petrol and diesel is no more regulated.

The oil companies have offered two sets of locations. In one, the highest bidder is the winner while in the other, a draw of lots throws up the winner. In both cases, the winner must arrange the land. But in locations that are auctioned, mostly at high-potential stretches, the land is leased to the company, which also provides the full capital cost for setting up of pump. In other locations, the dealer keeps the land and fully bears the expense of building the filling station.

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