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GUIDELINES FOR GRANTING AUTHORIZATION TO MARKET TRANSPORTATION FUELS

Written by Talent KAS

Related Topics: Government Policies & Interventions, Ease of Doing Business

News

  • The Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister has approved the Review of Guidelines for Granting Authorization to market Transportation Fuels.
  • This marks a major reform of the guidelines for marketing of petrol and diesel.

Need for the Reform

  • The existing policy for granting authorization to market transportation fuels had not undergone any changes for the last 17 years since 2002.
  • It has now been revised to bring it in line with the changing market dynamics and with a view to encourage investment from private players, including foreign players, in this sector.

Salient features

  • Non-oil companies can also invest in the retail sector, regardless of whether they have prior investments in the oil and gas sector.
  • The entities seeking authorisation will need a minimum net worth of ₹250 crore vis-à-vis the current requirement of ₹2,000 crore of prior investments in the sector.
  • The entities seeking market authorisation for petrol and diesel are allowed to apply for retail and bulk authorisation separately or both.
  • The companies have been given flexibility in setting up a joint venture or subsidiary for market authorization.
  • The newly authorised entities will have to install facilities to market at least one new generation fuel such as CNG, LNG, biofuels, electric charging, within three years of the outlet being operationalised.
  • The authorised entities are required to set up minimum 5% of the total retail outlets in the notified remote areas within 5 years of grant of authorisation.

Impact

  • More private players, including Foreign players, are expected to invest in retail fuel marketing leading to better competition and better services for consumers
  • The new entities will bring in latest technology for marketing of fuels and also encourage digital payments at the ROs.
  • It will boost direct and indirect employment in the sector.
  • Entities will also encourage employment of women and ex-servicemen at the retail outlets.
  • The new Policy will give a fillip to ‘Ease of Doing Business’, with transparent policy guidelines.
[Source: PIB, The Hindu]

 

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Talent KAS