NEW DELHI: The government plans to reserve a quarter of new petrol pumps, a coveted money-spinning business, for Other Backward Classes (OBC) as it seeks to woo a key voting segment that has a strong bearing on election results.
State-run firms Indian Oil Corp, Hindustan Petroleum and Bharat Petroleum, which have a near-monopoly in fuel retail, will have to allot 27% of new pumps to OBCs. Currently 25% of the pumps are reserved for Scheduled Castes and Scheduled Tribes and another quarter is reserved for defence personnel, freedom fighters, sportspersons and handicapped people. The new system will reduce SC/ST quota to 22.5% while other groups such as sportsmen will be accommodated under the three broad categories - OBC, SC/ST and general.
With assembly polls in states such as UP and Punjab already announced, the government is not inclined to implement the new scheme immediately. Recently, it was forced to put on hold a plan to reserve some seats for Muslims.
Industry sources say the scheme is being prepared to reap rewards for the Congress in the next general elections, but government officials said reservations in petrol pump allotment was an obligation. "We are reviewing the policy on allocation of retail outlets. We want to fulfil our obligations on reservation. We have held talks. It is being finalised," a government official said, on condition of anonymity.
Petrol pumps are keenly sought after by many as they are seen as a quick and virtually riskfree means to prosperity. Many pumps are owned by family members of politicians and other well-connected people, and in several cases, there are complaints of irregularities and nepotism in allotting petrol pumps.
The government also plans to address this by changing the system of allocation. Instead of the existing system where applicants are graded after an interview, there will a draw of lots among the eligible candidates. Oil industry executives were sceptical about the government's move as state-run firms are already bleeding as political considerations have prevented them from charging market prices for petrol and diesel. Selection of half the dealers on political rather than commercial considerations would be another blow.
"Setting up a petrol pump needs investment. Commercial considerations are important," an executive in the marketing wing of a state-run oil company said.
Dealership of a state-run firm is far more lucrative than running a petrol pump of Essar or Reliance Industries because the government controls fuel prices, forcing private firms to shut down operations when fuel sales are not remunerative. But in the case of state-run firms, even if the company is losing money from fuel sales, the dealer gets his margin.
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