In the state of Tamil Nadu, 5000 more fuel outlets to be opened
Posted on: 26/Nov/2018 10:41:48 AM - No. of views : (3281)
As a part of Centre�s plan to open as many as 60000 fuel outlets across India, the state of TN would get 5000 more fuel outlets. It is now said that with this 5000 more fuel outlets the number of fuel stations in TN is set to more than double. One important point is in Tamil Nadu oil PSU�s now have as many as 4600 retail outlets. This move to have more fuel outlets might bring happiness on the faces of many customers now but the dealers are more worried now. When the number of fuel outlets get increased then the volume of business for the existing dealers would be affected. It must be noted that for increase in the margin the existing dealer network is already fighting as the spiralling operational costs are high.
According to a source representing the petroleum dealerships association, about 80 percent of the existing 56000 dealers in India are low volume dealers and most sell less than 170 kilolitres of petroleum products on average per month. To profitably run the outlets, the existing margins are not enough and the proposed expansion would create more issues for both existing and new dealers. The important piece of information is the new fuel outlets would mostly be dealer owned sites and this is as per the plans of oil PSUs.
The sources also brought out that the investor had to invest amount of Rs 1.5 crores in establishing the outlet and that is without land cost plus a working capital of amount of Rs 30 lakhs to Rs 40 lakhs is required. It would take more than 10 years for the business to break even. Credit based business are being carried out by many existing dealers and about 30 percent of that is written off every year as bad debts is known. Doubling the existing network would be disastrous and would kill the fuel industry. This was confirmed by PSU dealer network. The idea behind the move to open new fuel outlets in TN was to provide more employment with an eye on the elections. One important piece of information is each outlet would have to employ about 10 people and 60000 new outlets would provide jobs to 5 lakhs to 6 lakhs people. Other industries like transportation etc would also do superbly with increase in the number of fuel outlets. It is now said that the existing dealers are planning to push oil OSUs for an exit policy as the contracts are one sided and also the land is locked permanently. This is in the wake of the planned expansion. The PSUs must offer an exit route for those who want to move out of this business and this must be on mutually agreeable terms. This was confirmed by the sources.
