Face Lift For India's Petrol Stations

NEW DELHI, Feb 19 Reuters is reporting that India's state-run oil retailers are polishing up petrol stations and sharpening market guile weeks before they lose exclusive control over the lucrative retail market for gasoline and diesel.

Once-shabby petrol stations are now gleaming with bright neon lights, digital dispensers and car wash machines, and offer Internet access, bank counters and stores selling a goods from condoms to cosmetics.

``We are taking many initiatives to ensure we remain the market leader when the oil sector is decontolled in April,'' said N Srikumar, deputy general manager of Indian Oil Corp (IOC).

IOC spent $102 million last year to upgrade petrol stations and will spend similar amounts for the next two years, he said.

State-run Bharat Petroleum Corp (BPCL) launched a credit card and a high-profile campaign to advertise the quality of its fuels.

In many retail outlets of Hindustan Petroleum Corp (HPCL), salesmen in bright blue uniforms greet customers, clean car windscreens and invite entrants for a lucky draw with a chance to win a car placed on a pedestal with red ribbons.

IOC has a 60-percent share in the 100-million-tonne-a-year domestic market for all oil products and a 50-percent share in the 47-million-tonne-a-year market for automotive fuels.

The rest is split between HPCL and BPCL, who share exclusive retailing rights with IOC until April.

Even India's largest private refiner Reliance Petroleum, which has one-quarter of India's refining capacity of 2.3 million barrels per day, must sell products through state-run retailers.

DIESEL MARKET

IOC, with 9,300 petrol stations, and HPCL and BPCL with 4,500 apiece, have a clear edge in the retail market in urban areas where real estate is scarce and costly.

But the urban market primarily caters to demand for petrol, which accounts for 10 percent of petroleum products in India.

Petrol is likely to offer higher margins after April's price decontrol but there is more money in the market for diesel that accounts for 40 percent of all petroleum products and is sold mainly on highways, where real estate is more affordable.

``That is going to be the area where we will see real action,'' said a petroleum ministry official.

The proposed privatisation of HPCL and BPCL also offers a new avenue for competition although there are fears that these will be picked up by another state-run firm when privatised.

Even if that happens, new players can bank on India's ambitious programme to build modern highways connecting major cities across the country by 2005. This will allow them to set up a distribution chain in new areas where demand is high.