Want to know about Petrol Pump Dealership Cost in India ? Well you have landed on the right article
Petroleum is one of the world’s most sought-after resources. It is a fossil fuel, like coal or natural gas, that has a variety of uses after it has been drilled out of the earth’s surface, and distilled.
One such derivative is petrol or gasoline that powers our vehicles. Consumers usually get their petrol supply from petrol pumps that can be operated by the public sector or private companies.
Some well-known companies that engage in storage and distribution of petroleum products include IndianOil, Bharat Petroleum, ONGC, Hindustan Petroleum, Shell, Jio-BP, and Essar Oil Limited.
Now, if you own or operate a distribution center for this precious natural resource, it would indeed make for a profitable business venture anywhere in the world.
Stay with us, to learn all about what it takes to qualify for a dealership, how to apply and obtain a license to become a petrol pump franchisee in India.
Petrol Pump Dealership Cost In India (2022)
1. General information
Applicants can select between regular, i.e. urban/highway or rural retail outlets. These are in general
Company or Corporation-owned, Dealer-operated outlets
Dealer-owned, Dealer-operated outlets
Company or Corporation-owned and Dealer-operated outlets under corpus fund schemes where financial assistance will be provided
2. Eligibility criteria to open a petrol pump
Applicants must be Indian citizens and residents per Income Tax rules.
The age should be above 21 but less than 60 years. There is some relaxation given here for freedom fighters.
Educational qualification is that applicants must be a minimum 10th pass or equivalent if they have studied abroad. Here again, relaxation is given to freedom fighters.
Public sector OMCs have reservations for certain categories of applicants, such as backward classes; Ex-defense personnel, and their dependents, physically challenged, etc.
Submission of eligibility certificates or documents issued by competent authorities will be needed to qualify.Non-individual applicants such as private companies, societies, government agencies, etc. have to be registered in India, must have been in operation for at least 3 years prior to the date of application, and should have made a net profit for 3 consecutive years.
3. Land requirements
General land requirements would be:
Land should be in the area or location that is advertised by the OMC and should either be owned or leased for a specified number of years, unless otherwise indicated.
The land should be available as on application date and if leased, there should be provision to sub-lease the land as necessary.
Land can be in the applicant’s name or co-owned by their family members or third parties. Where co-owned, a consent letter or power of attorney is needed.
4. Investment in Petrol Pump and Petrol Pump Dealership fees
Petrol Pump Cost in India will estimate the advertisements that call for applications and will include:
- Petrol Pump license cost is Rs. 18/KL for Motor Spirit (MS) and Rs. 16/KL for High-Speed Diesel (HSD) for dealer owned “B”/“DC” site Retail Outlets and Rs 48/KL for Motor Speed and Rs. 41/KL for High-Speed Diesel for a corporation owned “A”/“CC” site Retail Outlets
Application fees are non-refundable and will be either 3000/- or 10,000/- INR for different categories of applicants for regular outlets. It is between 2500/- to 8000/- for rural outlets. - Non-refundable fixed fees and bidding amount applies to selected candidates. The amount to be paid within 15 days of NOC receipt is between 5 for rural ROs to 15 lakhs for Dealer owned regular outlets.
The amount for Corporation-owned rural outlets is 10 lakhs and 25 lakhs for regular outlets.
Note that this can vary based on the OMC.
5. Applying for a petrol pump dealership
The application process starts when an advertisement is released by the OMC in newspapers. This information is made available on their websites too.
Applicants can go through the brochure and fill up a relevant form to indicate interest on the web portal of the OMCs.
Only one application per location is allowed, and intimation of application status will be sent to the registered mobile number of the candidate.
The selection process is through drawing of lots or a bidding process depending on the type of RO. If selected, the candidate would be asked to submit documents for land verification and field evaluation.
At this point, 10% of the security deposit amount will also need to be paid.
6. Certificates and permissions
On completion of the field verification and upon satisfactory completion of conditions stipulated therein, a letter of Intent is issued.
Following this, applications for other permissions can commence, starting with an NOC from the district magistrate’s office. For pumps on highways, NHAI also has to issue a go ahead before construction commences.
In addition, a CCOE and retail selling license will also be necessary, as applicable. Approvals from other competent authorities, for example, the electricity board, will be required.
He dealership is commissioned and executed copy of the dealership agreement is provided. License fees have to be paid to the OMC, the rates for which are on a per Kilo Liter basis.
Conclusion
In summary, OMCs advertise for and invite applications to install new pumps. Provided applicants meet the criteria and emerge successful in either the bidding or the draw of lots, they will be allotted a dealership.
With these outlets come opportunities for tie-ups with food and beverage units too. This only adds to the profitability of the venture.
The location of the outlet does play a part in the success of the outlet. However, petrol will always be in demand and consequently, petrol distribution channels are definitely a profit making proposition.
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Frequently Asked Questions (FAQs)
Q1. Is petrol pump profitable in India?
Despite price hikes, the demand for petrol doesn’t dip by much, so owning or operating an outlet will remain a financially stable business opportunity.
This can also be seen in the sheer number of outlets that exist throughout India. The number is in excess of 50k units and growing.
Q2. How much does a petrol pump owner earn in India?
Earnings will depend on location, operating costs, additional servies provided at the location, etc. As per different sources on the internet, the commission earned can be a minimum of Rs. 2/- per liter, depending on the company.
Some companies like Nayara even offer a performance-based return on investment.
Q3. Which petrol pump franchise is best in India?
If going by the market share data for 2020-21 that is available on the website of the Ministry of Petroleum and Natural Gas, then franchises of IndianOil, BPCL or HPCL are good options to consider.
The choice of course can be influenced by other considerations and preferences of the Franchisees.
Q4. What is the profit margin in petrol pump?
The profit margin for petrol pumps again vary based on commission rate and expenses Management of the franchisee.
Since the outlets are open all 7 days of the week and depending on the location of the outlet, a minimum of 5 to 6000 liters are sold.