Essar Oil in talks with oil majors

Mumbai: Essar Oil has initiated talks with public sector oil companies like Bharat Petroleum Corporation, Indian Oil Corporation and Hindustan Petroleum Corporation to procure petroleum products like diesel and petrol to meet the proposed retail business requirement for the initial one to two years. The company is also planning to set up around 400 to 500 retail petroleum outlets in the western and eastern parts of India by the end of the year 2001.

Essar Oil CEO Raj K Varma says: "Our 10.5 million tonnes per annum refinery project at Vadinar, Gujarat, is expected to be commissioned by mid-2003. But, we are going ahead with our marketing plans, which include setting up around 400 to 500 retail outlets by the end of 2002. During the period between 2002 and 2003, we are planning to source petroleum products from public sector oil majors.

" He said that currently the country has an excess oil production of around 4 million tonnes. It is estimated that during the period 2000-2001, the demand for petrol was 6.4 million tonnes and the demand for diesel was 37.3 milling. However, the production of petrol and diesel were 8 million and 39 million respectively.

Essar has decided to sell around 1,50,000 tonnes of petrol and 1.5 million tonnes of diesel through 500 retail outlets during the very first year of its operation.

Verma said by the year 2005-06, Essar would be in a position to sell the entire output of its own refinery (10.5 million tonnes) through its 1,700 retail outlets.

Essar Oil, one of the few companies eligible to enter the retail market after dismantling of the administrative price mechanism by April 2002, is also bidding for purchase of government shares in IBP through the ongoing divestment process.

The outcome of the process would be known in the next two to three months. The successful bidder would get the controlling interest in IBP and would have access to about 1,550 retail outlets, says Varma. The proposed retail outlets would enhance customer service, ATM, information centres and amusement activities. The company has signed a memorandum of understanding with ten leading corporates comprising FMCG, tyre manufacturers, soft drink producers, banks, financial institutions and entertainment firms to offer value-added services and products at Essars petrol pumps.