Indianoil seeks 50 pc partnership for RIEs 1,432 petrol pumps
New Delhi   21-Mar-2009
State-Run IndianOil has sought a 50; 50 partnership with Reliance Industries for operating the private' firm's closed 1; 432 petrol pumps. Besides IndianOil, Royal Dutch Shell too is believed to have evinced interest in reviving the petrol pumps, industry sources said. Reliance as part of a two-part bid process had sought Expression of Interest (EoI) from IndianOil Shell, Bharat Petroleum and Hindustan Petroleum by today for a possible partnership for reopening the petrol pumps. The company will set up a data room and interested parties will now do due diligence before making a firm financial proposal, based on which billionaire Mukesh Ambani's firm will choose a partner. Sources said while Reliance had wanted the retailers to select between 26, 50 and 74 per cent equity stake they would like in the proposed joint venture company that would be set up with the hived-off pumps, IndianOil had preferred equal partnership. An equity lesser than 50 per cent did not make sense for IndianOil, as it was not looking for a portfolio investment. Also, a stake higher than 50 per cent would turn the company into, a public sector company which was also not what IndianOil was looking for. The 1,432 petrol pumps that were shut in March 2008, had captured 15 per cent auto fuel market share, selling 4-4.5 million tonnes of petrol and diesel annually. IndianOil, sources" said, feels it can get at least 2 million tonnes of additional sales through the pumps considering the fact that the RIL's pumps would eat into volumes of the three retailers -IndianOil, BPCL and HPCL in proportion to their current share of 50:25:25 respectively. For Shell, it made business sense as these petrol pumps would add to the 75-80 outlets it 'already as on the ground and help it get a respectable market share. Of the 75-80 pumps it had set-up. Shell is currently operating about 55. IndianOil has about 17,600 petrol pumps. The partnership with, state-run firms would help Reliance overcome the handicap of not being able to use fuel from its two refineries at Jamnagar in Gujarat because they have been converted into only-for-exports units. Sources said branding, fuel sourcing and operational issues would have to be sorted out between Reliance and- the prospective partner. HPCL was not favourably inclined to the proposal while BPCL has not made up its mind yet. A Reliance spokesperson was not available for comments. The company, which had invested Rs 5,000 crore in setting up the retail network, had previously; worked on three different models to reopen the 1,432 pumps, the source said.