Barely 72 hours after the Centre announced it was allotting a whopping 55,649 new petrol pumps in the country, the apex body of petrol-diesel retailers plan to challenge the decision in court, a senior office-bearer said on Wednesday.

All India Petrol Dealers Association (AIPDA) President Ajay Bansal said the government’s move of November 25 appeared contrary to its own policy and the dealers would question its legal validity.

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“On one hand, the Centre has announced the closure of petrol pumps replacing them with alternative fuels by 2025. But, now they are publishing advertisements for allotting a second string of new petrol pumps. So what exactly is this policy?” Bansal wondered.

Presently, India has 56,000 retail petrol bunks of the three government-oil marketing companies (OMCs) — Bharat Petroleum Corp Ltd (BPCL), Hindustan Petroleum Corp Ltd (HPCL) and Indian Oil Corp Ltd (IOCL), besides another 6,000 outlets owned by private companies.

From these fuel stations, the average monthly sales for the OMCs comes to between 120-130 kilolitre with an average annual increase in demand on petrol-diesel of around 4 per cent.

The AIPDA has expressed surprise that against 56,000 retail outlets opened in the past 70 years, the present government wants to start a whopping 55,649 new outlets at one shot, with just a meager 4 per cent growth in annual sales.

The most disturbing fact is that around 80 per cent of the total retail outlets are under severe stress due to low sales, adding to their financial losses and debt burdens, while employing over one million people.

“A government committee has said in its report that a petrol pump is viable only if it notches sales of minimum 170,000 litres fuel each month,” Bansal pointed out.

In such a scenario, Bansal termed the government decision as “wrong, misleading the public for popularity and even the prospective investors who want to get into this business”.

AIPDA national spokesperson Ali Daruwalla rued that currently many want to get out of the business, but there was no exit route for dealers wanting to quit as the OMCs would not return the land on which the pump was set up as per prevailing rules.

“When the government is introducing alternatives fuels like electricity, biofuels, CNG, on one side and doubling the number of petrol pumps, the decision smacks of ignorance or a compromise of the existing business,” Daruwalla told IANS.

Federation of All Maharashtra Petrol Dealers Association (FAMPEDA) President Uday Lodh said that with the proposed doubling of retail outlets, the average sales volumes of both existing and new dealers would fall.

“In such dismal circumstances, petrol bunks may be compelled to explore alternative business streams or even open tea-pakora stalls to meet their expenses,” Lodh said.

Calling for transparency, the AIPDA reiterated that before opening any new outlet, the OMCs must publicise their economic viability report, specify the returns on investments especially with the daily price change mechanism now in force, and provide an exit route to ensure it is not “being deceitful to the new businessmen”.