Oil PSUs may miss target on outlet restrictions

February 16, 2016: State-run oil firms are likely to miss their respective targets for adding new petrol pumps and LPG distributors in rural areas in 2015-16 due to an oil ministry’s restriction on adding new outlets, according to official sources. Sensing they will not be able to meet targets on beefing up rural distribution, Indian Oil Corporation (IOCL), Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corporation (BPCL) have sought relaxation from the government on this parameter for their annual performance evaluation, sources said.

Companies have told the government that the target shortfall was due to factors beyond their control since the oil ministry had placed restrictions on appointing new dealers. The oil ministry has kept in abeyance for almost a year policies governing the appointment of petrol pump dealers and cooking gas distributors. Officials said the policies are being reworked and will be unveiled with new provisions soon. A restriction on appointing new petrol pump dealers mean state firms can’t quickly expand, especially in the inadequately served rural regions. This could also mean putting state firms at a disadvantage when private firms such as Reliance and Essar are adding new filling stations following the deregulation of diesel sales more than a year back.

Slower appointment of cooking gas distributors is a hurdle in the government’s goal of taking clean fuel to more homes quickly, especially in the rural and underdeveloped regions of the country. IOCL, HPCL, BPCL declined comment for the story. State firms’ performances are annually assessed based on the criteria and targets set at the beginning of each year in their respective memorandum of understanding (MOU) signed with the government. This practice of several years is aimed at ensuring accountability of the management and boosting efficiency at state firms. Different weightage are assigned to evaluation criteria, which for oil marketing firms include financial and physical performance, project management, social responsibility, research and development.

(Source: Economic Times, Indian Oil & Gas, February 16th, 2016)

URL : http://www.indianoilandgas.com/viewnews.php?id=29230
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