After a year of sluggish growth in fuel retail outlets, the three state-run oil-marketing companies--Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation--have chalked out aggressive plans for expansion in the next financial year. They will be commissioning over 2,100 outlets in 2009-10--over three times what they added in the current year--at an investment of about Rs 1,200 crore.
This follows the improvement in their financials made possible by the sharp decline in crude oil prices. After negative retail margins on products such as petrol and diesel for two-and-a-half years, the companies have begun clocking healthy positive margins.
Private fuel retailers, on the other hand, are adopting a cautious approach in their expansion strategy, having suffered earlier from the lack of level playing field with the public sector companies, who get oil bonds and discounts to compensate them for keeping retail prices low.
RIL, which was forced to shut 1,400 outlets last year, has no plans to re-open them till the company gets a level playing field. Essar Oil on the other hand has re-opened most of its existing 1,250 fuel retail outlets. Shell, another private sector retailer which has a license to roll out 2,000 retail outlets, is looking at looking at acquisition of sites for new retail outlets. It operates 45 outlets at present.
"Our retail outlets are at varying stages of development and we are very positive about the prospects of longer term growth," said Shell's GM (Retail) Surinderdeep Singh.
With the international crude oil prices touching a low of $46 a barrel, down 68 per cent from an all-time high of $147 in July, analysts say the business environment is conducive for fuel retailers to expand their footprints. Public sector companies are also being aggressive to take as much share as they can before market-linked pricing kicks in.