Indian Oil Corp (IOC) is likely to take the largest 37.5% stake in the proposed joint venture to manage fuelling facilities at all airports controlled by the Airports Authority of India (AAI), sources with direct knowledge of the matter said. Airports Authority of India is likely to have a quarter stake while Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL) will have 18.75% each in the joint venture that has been negotiated for long with the AAI and IndianOil locked in a keen contest for the larger stake.
he idea of a common fuelling facility with joint ownership is to allow open access to all fuel suppliers for a fee without having to erect their own separate facilities. Reliance Industries (RIL) has also written to the government seeking equity in the venture and is awaiting a decision, sources said. In its communication, Reliance Industries has claimed that the oil ministry had earlier said private players would also have a role.
Reliance Industries, Indian Oil Corp, HPCL and BPCL declined to comment on the matter. The proposed joint venture will oversee about one-third of aviation fuel business in India. The rest is at Delhi, Mumbai, Hyderabad and Bengaluru, where either private airports solely or in separate joint ventures with state oil firms manage the fuelling facilities.
Indian aviation market is poised to be the third-largest in the world by 2026. Domestic airlines, aided by low fuel prices that account for about 40% of their operating cost, carried nearly a quarter more passengers in the first four months of 2016 from a year ago. Domestic aviation turbine fuel (ATF) sales rose 9% to 6.2 million tonnes in 2015-16, encouraging oil giant BP to obtain permission to market jet fuel in India.
Indian Oil Corp has long dominated the ATF business with storage and fuelling facility at all major airports. Its refineries located across the country offer it the flexibility needed to place fuels at airports easily and cheaply while its longstanding relationships with clients give it an edge in the market. It has more than 60% market share while private players such as RIL and Essar Oil account for about 5%.
It is this dominance that made IndianOil a little reluctant to agree to the idea of a common infrastructure and led to long-drawn negotiations with AAI, which also wanted the largest share in the joint venture, according to sources. Ross Stripling Womens JerseyShare This