Marketing Scenario

Currently, IOC, HPCL, BPCL and IBP market all the petroleum products. With the introduction of parallel marketing scheme, SKO and LPG is being marketed by a few new entrants into the sector. However, their share of marketing is miniscule, given the price distortion between the products marketed by PSU oil majors. Thus, their market shares are not expected to grow unless prices of these products marketed by PSU oil companies are determined. In the year 1995-96, of the estimated total consumption of 74,688 tmt about 690 tmt was sold by parallel marketers, 72,542tmt was sold by PSU majors and the balance being, direct imports by industrial consumers.

The Market Share Of Each Of These Companies During The Last Three Years Is Given Below.

While the market share of IOC and IBP has been continuously falling, the market shares of BPCL and HPCL have been on the rise.

Of the products marketed by oil companies, MS & HSD can be categorized as retail products where the oil companies fight for the market share and sales growth. A portion of MS/ HSD is also sold to direct industrial consumers. The importance of these two products lies in the fact that they together not only constitute more than 50% of the total sales volumes but also form the constituents of aggressive growth.

The break-up of MS/ HSD sales into retail and direct, over the last two years is below.

MS/ HSD - Retail And Direct Sales (tmt)

The share of each of the oil companies in MS & HSD segment-wise for the last 3 years is given in the table

MS/ HSD Segment-wise Sales Of Oil Companies

Thus, IOC is a very large player in the direct market with 90.4% share in MS-Direct and 76.0% share in HSD-Direct.

Considering the geographical spread of the country, the infrastructure for movement of petroleum products is woefully inadequate for handling the growing volume of POL products. Not much thought has been given for development of pipelines. Due to non-availability of tank-wagons, oil movement is undertaken by road which is not only hazardous and polluting but also 15 to 20 times costlier (in terms of energy consumption as per SRC report) compared to pipelines and 5 times costlier than railways. In a country where oil is being imported, expenditure on movement of POL products by road results in serious drain of foreign exchange. The losses due to road/ rail transportation are also 3 to 5 times higher compared to transportation through pipelines.

The current mode of transporting POL products is discussed in the following paragraphs.