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June 20,, 2019

Outlet overkill

Public sector oil marketers have embarked on their largest outlet expansion plan. A case of spreading too thin?

Will the doubling of fuel stations support pump economics?

 

India’s oil retailing sector is set for a shake-up with public sector oil marketing companies (OMCs) deciding to set up over 78,000 new fuel pumps around the country, which would redefine the competitive landscape.

 

Public sector OMCs dominate the fuel retailing space, accounting for ~90% of the retail network.

 

Following the tendering of over 78,000 petrol pumps by the OMCs, competition between them and with private sector players is expected to intensify. New players are also eyeing a piece of the fuel retail market, which would exacerbate competition.

 

Hence, the question that arises is whether the players will be able to maintain operational sustainability and profitability, and ensure a return on investment (RoI) with the more than doubling of pumps in the country.