Brief note on marketing of transportation fuels in India

• The process of liberalization of the downstream sector in India began in February 1993, with the decanalising of imports of Superior Kerosene Oil (SKO), Liquefied Petroleum Gas (LPG) and Furnace Oil (FO) and allowing private marketers to import and sell these products at market determined prices.
• In November 1997, the Government of India passed a resolution to allow marketing rights for transportation fuels - motor spirit (MS), high speed diesel (HSD), and aviation turbine fuel (ATF) conditional on owning and operating refineries with an investment of at least Rs. 2000 crores or oil exploration and production companies producing at least three million tones of crude oil annually.
• With the dismantling of the APM, the GOI has amended the provisions of the resolution of 1997, in line with announcement of the India Hydrocarbon Vision - 2025, under which marketing rights are also available to a company investing or proposing to invest Rs. 2000 crore (about US$ 415 million), in exploration and production (E&P), refining, pipelines, or terminals. The Government to its satisfaction will do the valuation of the investments.
• In case of future investments, the time frame for making such investments in the eligible activities would be counted as ten years from the date of grant of authorization for marketing of transportation fuels. A bank guarantee of Rs. 500 crore would have to be provided to the GOI, which would be discharged on completion of the investment of Rs. 2000 crore.
• Every eligible company would get only one authorization for marketing transportation fuels, and the authorization for marketing transportation fuels, and the authorization will not be transferable without permission of the GOI.
• The Company seeking authorization to market transportation fuels will be required to make an application in a specified form.
• There shall be no limit to the quantum and size of the scheme and the number and location of retail outlets.
• The marketing scheme shall contain details of :
• The source of supply of products to be marketed.
• Tankage and other infrastructure proposed to be established along with their capacity;
• Means of transportation of products to depots and to RO's;
• The number of locations of RO's proposed to be established and details of their storage and dispensing capacity;
• The total quantum and type of products to be covered under the marketing scheme.
• Company will have to follow GOI/Regulatory board guidelines on retail service obligations (to make available MS and HSD to retail consumers through out the specified working hours) and marketing service obligations (to set up retail outlets in remote areas and low service areas) that are set up from time to time in public interest.