Report of the Expert Committee to review guidelines for granting authorisation to market transportation fuels Ministry of Petroleum & Natural Gas Government of India April 2019 Report of the Expert Committee to review guidelines for granting authorisation to market transportation fuels | 1 Report of the Expert Committee to review guidelines for granting authorisation to market transportation fuels We the undersigned, Members of the Expert Committee to review guidelines for granting authorisation to market transportation fuels to oil companies, constituted by the Ministry of Petroleum & Natural Gas, Government of India vide Office Memorandum M-12029(11)/2/2018-OMC-PNG dated 5.10.2019 have adopted the Report and submitted it. Dr Kirit Parikh Shri G.C. Chaturvedi Member Member Shri M.A. Pathan Dr Errol D’Souza Member Member Shri Ashutosh Jindal Member Secretary Report of the Expert Committee to review guidelines for granting authorisation to market transportation fuels | 2 Report of the Expert Committee to review guidelines for granting authorisation to market transportation fuels | 3 Table of Contents Abbreviations ....................................................................................................................................6 1 Introduction ............................................................................................................................. 10 1.1 Background ....................................................................................................................... 10 1.1.1 Existing guidelines ............................................................................................................... 10 1.1.2 Eligible activities .................................................................................................................. 10 1.1.3 Conditions for proposed investment .................................................................................. 11 1.1.4 Marketing scheme details ................................................................................................... 11 1.1.5 Manner of authorisation ..................................................................................................... 12 1.1.6 Authorisations granted ....................................................................................................... 13 1.1.7 Setting up of retail outlets (ROs) ......................................................................................... 13 1.2 Formation of the Expert Committee ................................................................................... 14 2 Points for deliberation .............................................................................................................. 18 3 Stakeholder interaction ............................................................................................................ 22 4 Expert Committee’s deliberations ............................................................................................. 28 4.1 Relevance of obtaining authorisation in today’s scenario ................................................... 28 4.1.1 Relevance of requirement of authorisation ........................................................................ 28 4.1.2 Modifications required if any, in the extant criterion of granting authorisation ............... 28 4.2 Creating level playing field for all players ........................................................................... 38 4.3 Transportation Fuels included in Resolution dated 8th March 2002 ..................................... 39 4.4 Demand for enhancing flexibility in operationalizing the authorisation ............................... 39 4.4.1 Restrictions on operationalization of marketing authorisation .......................................... 39 4.4.2 Restriction on dealership of more than one company ....................................................... 42 4.4.3 Miscellaneous Points .......................................................................................................... 42 5 Recommendations .................................................................................................................... 46 5.1 Manner of authorisation ................................................................................................... 46 5.2 Authorisation for retail marketing ..................................................................................... 46 5.2.1 Eligibility criteria .................................................................................................................. 46 5.2.2 Application process ............................................................................................................. 47 5.2.2.2 Marketing plan ................................................................................................................... 48 5.2.2.3 Remote area obligation ...................................................................................................... 48 5.2.2.4 Universal service obligation ............................................................................................... 49 Report of the Expert Committee to review guidelines for granting authorisation to market transportation fuels | 4 5.2.3 Bank guarantee and penalties ............................................................................................ 49 5.2.5 Appointment of same person as dealer by multiple companies ........................................ 50 5.3 Authorisation for bulk marketing ....................................................................................... 51 5.3.1 Eligibility criteria .................................................................................................................. 51 5.3.2 Application process ............................................................................................................. 51 5.3.3 Bank guarantee and penalty ............................................................................................... 52 5.4 Applicability of new guidelines to existing authorised companies ....................................... 52 5.4.1 Retail marketing .................................................................................................................. 52 5.4.2 Bulk marketing .................................................................................................................... 54 5.5 Common points ................................................................................................................. 54 5.5.1 Applying for both retail and bulk authorisation ................................................................. 54 5.5.2 Submission of information .................................................................................................. 54 5.5.3 Application by a JV or subsidiary ........................................................................................ 55 5.5.4 Surrender of authorisation ................................................................................................. 55 5.5.4 Transfer of authorisation .................................................................................................... 55 5.6 Other recommendations ................................................................................................... 55 5.6.1 Level playing field for PSU OMCs ........................................................................................ 55 5.6.2 Issues not related to the authorisation............................................................................... 56 5.7 Authorisation guidelines at a glance .................................................................................. 57 5.7.1 For new applicants .............................................................................................................. 57 5.7.2 Companies authorised to market transportation fuels under the previous guidelines ..... 58 5.7.3 Existing PSU oil marketing companies (IOCL, BPCL and HPCL) ........................................... 58 Annexures ....................................................................................................................................... 60 Annexure-1: Ministry of Petroleum Resolution P20012/29/97-PP dt. 22.11.1997 ........................... 62 Annexure-2: Ministry of Petroleum Resolution P23015/1/2001-Mkt dt. 8.3.2002 .......................... 67 Annexure-3: Constitution of the Expert Committee by MoP&NG ................................................... 73 Annexure-4: MoP&NG notice dated 5.11.2018 seeking comments ................................................. 74 Annexure-5: Views/ suggestions received from stakeholders ........................................................ 75 Annexure-6: Comments/suggestions made by stakeholders during presentations ......................... 86 Annexure-7: Gazette Notification dated 5.8.2003 for notified districts for Remote Areas ............... 89 Report of the Expert Committee to review guidelines for granting authorisation to market transportation fuels | 5 Abbreviations APM ....................................... Administered Pricing Mechanism ATF ........................................ Aviation Turbine Fuel BG .......................................... Bank Guarantee BPCL ...................................... Bharat Petroleum Corporation Limited CAGR ..................................... Compound Annual Growth Rate CBM ....................................... Coal Bed Methane