Trafigura denied licence to operate fuel pumps in India

The government has rejected for now global commodity trader Trafigura’s request for a licence to operate petrol pumps in the country. Geneva-headquartered Trafigura, which along with Russian fund UCP and Russian oil firm Rosneft had purchased Essar Oil’s refinery and petrol pumps last year for $13-bn, had sought a separate licence to retail transportation fuels in the country, but the government said the trader didn’t qualify for one just yet.

Trafigura is the latest in a series of global players expressing interest in entering the rapidly expanding Indian fuel retail market. UK’s BP has obtained a licence and plans to launch filling stations soon. Saudi Aramco and French firm Total too have announced intentions to operate pumps here while Shell already operates more than 100 pumps in the country.

Trafigura’s licence bid was not accepted on the grounds that it had not invested enough to be eligible for a licence. To qualify for a fuel retail licence, a company must have invested Rs. 2,000-crore in the Indian oil and gas sector or proposed to invest the amount in the next 10 years, according to the official guidelines. Trafigura said its application was still pending. “A licence has been applied for on behalf of Puma Energy. The application is still pending. No decision has been taken to enter the retail market should a licence be granted,” Trafigura said.

Trafigura said its investment in Essar Oil made it eligible for a separate retail licence but the government rejected the argument saying the rules allowed just one licence for one set of investment and since Essar Oil already owned a retail licence, an additional licence for its new shareholder could not be issued, the person said.

“Every eligible company would get only one authorization i.e. the company that has invested or proposes to invest in the eligible activities either in its name or in the name of the company in which investment has been made or is proposed to be made,” says a provision in the 2002 rule on grant of authorisation. The government’s rejection, however, does not mean that it has shut the doors permanently for Trafigura. The company can approach the government again with a fresh request by proposing to invest Rs. 2,000-crore in the hydrocarbon sector in the next 10 years. Any new investment by Trafigura in expanding its Indian refinery or marketing infrastructure would count as the trader’s investment and contribute towards making it eligible for a licence.