Reliance Industries and UK's BP plc opening petrol pumps in the country may affect the market share of government fuel companies. This has been said in a recent report by Morgan Stanley. Reliance and BP announced their partnership last week for the retail sale of fuel. Under this partnership, the British company has acquired 49 per cent stake for one billion dollars. Under this partnership, the number of Reliance petrol pumps will increase to 5,500 in the next five years. The company recently operates 1,400 petrol pumps in the country. Apart from this, the company will also increase the number of lucrative aviation fuel stations from 30 to 45.
This proposed partnership between RIL and BP is expected to be completed in the first quarter of 2020. The report by Morgan Stanley states that this share will increase competition in the domestic fuel market. Because of this, the price of fuel will be out of government intervention. This report states that 'if RIL-BP opens petrol pumps as per the target, by 2025, the company's total number of petrol pumps in India could be eight percent of total fuel stations. We estimate that this will have an impact on the share of oil marketing companies in both the aircraft and auto fuel sectors.
According to this report, this partnership will have the highest impact on the Indian Oil Corp (IOC) stake as it has happened in the last decade. According to the report, Bharat Petroleum Corp Ltd (BPCL) has the highest number of petrol pumps on the highway, so it will have to devise a more aggressive pricing strategy as RIL-BP will target this area the most. As of now, according to this report, its impact on HPCL is not expected to be much. This is because most of HPCL's petrol pumps are in urban areas. Due to the problem of long-term lease in urban areas, the new company will have to make more effort to enter the cities. This is the third joint venture between Reliance and BP after 2011.
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