India Fuel Network: India Becomes World's Third Largest Petrol Pump Network, Surpassing 100,000 Outlets

India has achieved a significant milestone by expanding its petrol pump network to over 100,000 outlets, a figure that has nearly doubled in the last decade. This rapid growth positions India as the world's third-largest country in terms of fuel retail infrastructure, trailing only the United States and China, while the expansion reflects India's burgeoning energy demands and its commitment to enhancing fuel accessibility across its vast geographical landscape, particularly in remote and rural areas. This development is a testament to the aggressive strategies adopted by both. Public and private oil companies to meet the increasing demand for vehicular fuel.

Closing the Gap with Global Leaders

Currently, both the United States and China operate between 110,000 and 120,000 petrol pumps. India's network is now within a striking distance, with a gap of merely 10,000 to 20,000 pumps. This gap is expected to narrow further as Indian public and private companies. Continue their concerted efforts to expand their networks into remote and far-flung regions. B Ashok, former chairman of Indian Oil Corporation, highlighted the positive impact of this expansion, stating that it has largely addressed fuel availability issues in rural and remote areas and improved customer service by fostering greater competition. This competitive environment is ultimately benefiting consumers through better services and choices.

Geographical Reach and Diversification of Services

Over the past decade, the geographical distribution of petrol pumps in India has also undergone a significant transformation. Petrol pumps located in rural areas now constitute 29 percent of the total, a notable increase from 22 percent a decade ago. This shift indicates a broader reach of fuel services beyond urban centers, extending to the farthest corners of the country. On top of that, the nature of petrol pumps has evolved; while they traditionally offered only petrol and diesel, approximately one-third of the pumps now provide alternative fuels, including CNG and electric vehicle charging facilities.

This diversification is a crucial step towards India's energy transition and its efforts to meet future clean energy requirements. Despite the massive expansion, the private sector's control over petrol pumps in India remains limited, accounting for less than 10 percent of the total network. Reliance Industries operates approximately 2,100 pumps, while Nayara Energy runs about 6,900. Other private players like Shell and MRPL have even smaller footprints, while the continuous government control over pump prices has restricted private investment, thereby maintaining the dominance of public sector oil companies. This situation poses a challenge for private companies looking to increase their market share, as they face a lack of flexibility in pricing.

Concerns Over Economic Viability

The rapid pace of expansion has led some industry officials to question its economic sustainability. In April, Harish Mehta, then CEO of Reliance BP Mobility, remarked that India has too many petrol pumps, many of which are unproductive. He cited Indonesia, which has only 9,000 petrol pumps, as an example. B Ashok also acknowledged the intense competition for market share, where companies fear that if they don't establish new pumps, competitors will, thereby eroding their market share. New outlets also contribute to increased sales, helping to offset potential losses at existing pumps due to heightened competition.

Rising Consumption and Operational Challenges

India has witnessed a substantial increase in fuel consumption over the last decade, with petrol consumption rising by 110 percent and diesel demand by 32 percent, leading to an overall increase of approximately 50 percent in total petrol and diesel sales. On average, diesel sales per outlet are roughly double that of petrol sales, while however, Ashok noted that this increase in demand isn't sufficient to sustain the pace of retail expansion. He pointed out that many pumps experience very low sales, but dealers are hesitant. To close them due to reputational concerns, especially in smaller towns and rural areas. Companies also face a complex process for closing outlets, making it difficult to shut down inefficient pumps.

Future Outlook and Stability

Nitin Goyal, Treasurer of the All India Petroleum Dealers Association (AIPDA), also acknowledged the issue of economic unviability extending beyond urban centers, while he emphasized the need for the government to ensure that older pumps remain viable. Industry officials believe that the retail network will eventually reach a stable state, arguing that India currently possesses enough pumps to meet present and future fuel demands for many years. In the United States, competition led to the closure of inefficient outlets, resulting in a reduction in the number of fuel stations over time. Officials also anticipate that the addition of gas and charging facilities will boost revenue for fuel retail outlets, aligning with the growing popularity of alternative fuel vehicles. This move is expected to enhance customer options and improve the long-term stability of fuel stations.