PSU OMCs to benefit in the near term with fuel de-regulation: CRISIL

By Editor News
CRISIL says marketing margins of PSU oil marketers to expand by 30-40 paise/litre in 2 years, contract there after
Deregulation of diesel price, announced last October, has set the stage for re-entry of private entities in fuel retailing. However, it is unlikely these players will expand aggressively, at least in the medium term, until they are convinced the government won't do a policy flip-flop and intervene in pricing like it did in 2005. So the big three public sector oil marketing companies are unlikely to lose more than 3-5% market share over the next 2 years. What's more, OMCs' marketing margins will expand by 30-40 paise a litre and their profitability will improve by Rs 38-43 billion in the next 2 years. In the long run, however, marketing margins will decline as competition intensifies due to expansion and aggressive pricing strategies by private players. Private players are likely to capture 10-12% market share by 2018-19 with 7-8% share in fuel retail outlets.

Diesel decontrol to bring back private companies
Deregulation of diesel prices last October (petrol prices were deregulated in 2010) has set the stage for private players to once again challenge, after nearly 9 years, the dominance of the Big Three oil marketing companies (OMCs) - Indian Oil Corporation IOCL), Bharat Petroleum Corporation BPCL) and Hindustan Petroleum Corporation (HPCL) - all of them public sector undertakings.

#CRISIL
 

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