Public sector oil marketing companies (OMCs) like Indian Oil Corp (IOC) want the government to allow them to invest on new fuel retail outlets without restriction.
It may be recalled that the union government recently prohibited these firms, who are sitting on large pile of debt, from making investment in retail pumps.
Government has reportedly instructed state-run OMCs to stop providing financial incentives to private entities for setting up retail outlets because banks will give them loans if the outlets are commercially viable. And companies set up pumps only after ascertaining its viability.
However, these OMCs want to expand their fuel outlets at a time when competition is emerging from private players like Reliance Industries, Essar Oil and Shell on the back of partial de-regulation of diesel prices.
In the past three years, IOC, Bharat Petroleum Corp ( BPCL) and Hindustan Petroleum Corp (HPCL) set up 10,236 retail outlets (ROs) and purchased land at key locations along highways for new pumps. This raised concerns in the oil ministry as their combined borrowings have soared to Rs 1.5 lakh crore.
Government officials also said they want to verify if the declared expenditure on pumps is inflated. Oil marketing companies used to invest between Rs 20 lakh and Rs 2 crore on each pump, depending on location, etc.