The Hindu Business Line : Ministry finalises dealer selection norms for oil PSUs

THE Petroleum Minister, Mr Ram Naik, has finally agreed to remove the informal ban and allow public sector oil marketing companies to sign on dealerships for petrol and diesel. However, not before they pay the political price - the companies will be required to maintain reservation quotas in the allocation of dealership, albeit lower than the existing 50 per cent norm.

"The Petroleum Ministry, in consultation with the political masters, has internally finalised dealer selection guidelines to be followed by the public sector oil marketing companies. The reservation will be anything between 25 per cent and 50 per cent of the retail outlets to be awarded by the oil PSUs. We have worked out very liberal guidelines that give the oil companies freedom in appointment of dealers," a senior official said.

The Ministry has called for a meeting with the public sector oil marketing companies on August 13 to discuss the guidelines.

Oil marketing companies have been crying foul over the informal ban imposed by the Government on selection of dealers in February this year since it does not apply to private players such as Reliance, which plans to set up around 500 retail outlets during the current financial year.

The origin of the ban goes back to the `petrol pump' scam in August last year when 417 cases of "politically connected" allotments were uncovered by the media. This led to the Government scrapping the selection process through the Dealer Selection Boards. Integral to the selection process was the reservation of dealerships for certain sections of the society.

The Government has been vacillating on this issue since the petroleum sector has been deregulated since April 1, 2002, and private players can set up retail outlets without providing reservations for any segment of society.

After recent informal consultations with the Prime Minister's Office (PMO), the Petroleum Ministry has decided to keep the minimum 25 per cent since it corresponds to allotment for Scheduled Castes and Scheduled Tribes. Given that the general elections are not very far away, Mr Naik will have a tough time striking off the remaining beneficiaries, which include defence personnel, freedom fighters, etc. A final decision on this issue leading to removal of the ban on allotment of dealership is expected to be taken on August 13.

The restriction in dealership selection has injured the interests of the public sector oil marketing companies since it cannot keep acquiring land and holding it in the anticipation that the selection norms will be issued shortly.

"We have been issuing advertisements for acquiring land for dealerships. However, land acquisition is an expensive affair and we cannot keep holding it. Besides, public sector watchdogs such as the Comptroller and Auditor General (CAG) could blame us on such an issue. Also, in cases where we do not acquire the land, company personnel cannot be deployed to man the outlets due to lack of required manpower, which anyway will be an expensive proposition," a senior oil marketing company official said.

Also, the landowners are looking for dealership commitment which the private players are willing to entertain and which cannot be considered at the moment by the public sector companies.

Currently, one in four dealers belong to the reserved category since the reservation categories have been added over time.

Of the 19,049 retail outlets operating today which are entirely in the public sector fold, around 5,078 outlets or 26 per cent are in the reserved category. These include sub-categories such as scheduled caste (1,365), etc.

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