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Petrol Pump License: The Basic Eligibility Criteria

For promoting transparency in awarding a petrol pump license and franchise by Oil Marketing Companies,  the Government has formed a new dealer selection process. Under this process, the application is first checked as per the criteria established by the law. After all the eligibility criteria are met, the applicant go-ahead to the next round where the process of bidding takes place.

In this article, we look into all the criteria for an individual’s petrol pump license. We are discussing detailed information about the entire process of opening a new petrol pump with India.

Hindustan Petroleum Corporation Limited, Bharat Petroleum Corporation Limited, and Indian Oil Corporation Limited, etc. allocates petrol pumps to all dealers who have a valid license across India and delegate them to sell their petroleum products. They are the main diesel and petrol selling companies in India. India has 63,674 petrol pumps currently, most of them are under the public sector. Around 14,600 belongs to Bharat Petroleum (BPCL)^[1] 27,000 petrol pumps belong to Indian Oil (IOCL),  and 15,300 belongs to Hindustan Petroleum (HPCL). The Government has public sector oil companies that have planned to allot about 65,000 petrol pumps in the public sector oil in India.

What will be the Basic Eligibility Criteria for Petrol Pump License?

Following is the eligibility criteria which are required to be fulfilled for getting the petrol pump license:

• The person should be a citizen of India.
• The applicant should be a person resident in India, i.e., he should have stayed in India for more than 182 days in a previous financial year.
• The age limit for the applicant is 21-58 years.
• Applicants from the freedom fighters category are exempted.
• Must have an identity proof document. Proof of age of the applicant should be verified by presenting a copy of the 10th Matric Certificate or Secondary School Leaving Certificate or Passport or Birth Certificate or Affidavit for age proof or Identification card issued by the Election Commission.

What are the Basic Educational Requirements?

All the applicants who are from a rural area and belongs to

• General Category should be at least 10+2 passed and
• The applicants who are SC, ST, or OBC should be minimum 10^th passed.
• If the applicant resides in the village and belongs to the reserved category then he should be at least 10th pass but if the applicants of the general category must be 12th pass

In the case of the opening is for

• Other than rural area, then the applicant should have a minimum qualification awarded by  any of the universities incorporated under the Act of the Central or State Legislature in India or any other educational institution establishment  by an Act of Parliament or declared to be deemed as a University of Chartered Accountant, Company Secretary or any person having a Diploma in engineering.
• In urban areas, if someone wants to open a petrol pump in urban areas, then he/she should be a Graduate.

Investment Requirement

For opening a petrol pump –

• in a rural area: the minimum investment required is 12 Lakhs and
• in an urban area: the minimum investment required is ₹ 25 Lakhs.

The investment would be in the following form:

• Bonds
• Shares of listed companies in Demat form.
• Mutual Funds.
• National Saving Certificate.
• Funds in saving the account, deposits with Bank/Registered

Please note that only 60% of the value of Mutual Funds, and shares will be considered for eligibility criteria. The Chartered Accountant should provide a valuation certificate for the assets.

The investment should not be in the following form:

• cash,
• Jewelry, etc.  
• Any other items/articles for which ownership cannot be established.
• Balance in a current account

Land Requirement

The land is a basic requirement for the selecting of petrol pump dealers. The basic requirements are as follows:

• Land should be on National Highway
• Applicants shall have a suitable piece of land by way of ownership / long term leasing in the advertised location/area.
• Applicants shall apply a firm Offer for a suitable piece of Land for purchasing or undertaking a long term lease.

Oil marketing companies scrutinize the location before allocating the petrol pumps. Companies analyze whether the location would be helpful in generating sales. Sometimes, these oil marketing companies open tender for particular locations where the petrol pump is to be opened.

Based on the classifications given above, different types of documents are required to submit by the applicant to prove the intent to purchase or ownership of the Land. The advertisement should contain all the basic requirements in the Land, like area, etc. If the applicant gets selected for the dealership, he/she is required to develop the offered Land, like Mannering up to the road level by cutting/filling, with good earth, layer-wise compacted as per standard engineering practices. The applicant is required to provide a retaining wall and compound wall of a minimum height of 1.5 meters, designed as per site conditions.

The above are some of the major criteria for providing a petrol pump license. Applicants after satisfying these criteria will be allowed to progress to the next stage, wherein the final decision is made based on a draw or lots or a bidding process.

Fees for Petrol Pump License

• The application fee is
• Rs.100/- for rural retail and
• Rs.1000/- for regular retail outlets.
• The applicants who belong to Scheduled Caste and Tribes can get a 50% concession on the application fee.
• The applicant is required to pay the application fees through the demand draft. The application fee is non-refundable, and the applicant can apply for just one location.
• If the dealer owns the Land, then the applicants are required to pay a fee Rs.15 lakhs which is non-refundable in nature.

How to apply for Petrol Pump Dealership?

1. After the applicant see the advertisement given in the newspaper or website of
2. the oil companies,
3. Interested candidates apply online for a license to open a petrol pump in the desired state/city/region.
4. After receiving a number of applications, the oil company announces the name of the winner by means of a lottery system. Whosever’s name comes out in the lottery; they are required to submit all the documents required.

Note: After getting the license for Petrol Pump, the applicant is required to register for paying Goods and Service Tax (GST) and is also required to open a Current Account in the name of a petrol pump.