Adani-Total SA announce joint venture in fuel retail business

NEW DELHI: Motorists zipping through highways will soon get one more option for tanking up besides petrol pumps operated by state-run fuel retailers and two private companies. The Adani group and French major Total SA on Wednesday announced a partnership to enter the country’s fast-expanding fuel retail business and develop terminals for importing gas in ships.

The joint venture will roll out 1,500 outlets, mostly on highways, in the next 10 years. The stations are expected to offer multiple fuels, including CNG for cars and LNG for trucks, as well as servicing facilities. Sources said Total is also discussing buying into Adani’s city gas business, including CNG retail.

Adani will be the third Indian private entity to enter India’s fuel retail segment after Reliance Industries Ltd and Essar, which has since been acquired by Russia’s Rosneft and an investment consortium led by commodity trader Trafigura and UCP Investment.

Total is the third foreign company to eye India’s fuel retail market after Shell and BP. Shell has a skeletal presence. BP had announced interest in the retail business through a joint venture with Reliance but has not yet taken any initiative, leaving it to Reliance. That makes Russia’s Rosneft as the only foreign oil company with a noticeable presence in India’s retail segment through Nayara Energy, the renamed Essar Oil avatar.

India’s fuel retail market is lucrative with 5-6% annual growth rate. But the vast network of state-run retailers and land problems for new outlets make the going tough for new entrants. This is compounded by price controls making a backdoor entry, seen when the government last month asked state-run retailers to bear Re 1 per litre under-recovery as part of the plan to check runaway pump prices in the face of rising public anger ahead of elections in key states.