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By Nidhi Verma
NEW DELHI, Aug 7 (Reuters) - India is set to relax rules forsetting up fuel stations after almost two decades, in a moveexpected to allow companies like Saudi Aramco, Totaland Trafigura to gain a foothold in a sector dominated bystate-run entities.
The new rules - suggested by an expert panel - mirror thosein developed nations like the United States and Britain, andwould allow convenience stores, shopping malls and hypermarketsto sell fuels if they are eligible, said an oil ministry source.
The government panel has recommended allowing marketingrights for sale of gasoil, gasoline and aviation fuel tocompanies with a net worth of 2.5 billion rupees.
India, where fuel demand is expected to rise in the comingyears, has turned into a lucrative market after the governmentremoved controls on retail pricing of gasoline and gasoil.
Global players, however, faced difficulties in getting afoothold as they need to commit investment of 20 billion rupees($272 million) in India's oil and gas sector to get fuelmarketing rights.
The cabinet is expected to approve the proposal in four tosix weeks, said the source, who declined to be named becausethey are not authorised to speak to media.
India's oil ministry did not respond to an email seekingcomment.
DIFFICULT TO SURVIVE
India has emerged as a key driver of global oil demand. TheInternational Energy Agency expects the South Asian nation toaccount for a quarter of global energy use by 2040.
Companies including Reliance Industries,RoyalDutch Shell and Nayara Energy, part owned byRussian oil major Rosneft account for about 10% of the64,625 fuel stations in the country, according to data posted onthe Petroleum Planning and Analysis Cell.
"For a new player it is very difficult to survive as themost of the ROs (retail outlets) are owned by state-runcompanies. We want to provide enabling environment to havegreater competition," said the source.
The new rules will help trader Trafigura's downstream armPuma Energy, which had applied for a license last year to sellauto fuels in India.
Subsidiaries and joint ventures of companies with existingfuel retailing licenses need to apply again for the marketingrights, according to the panel's suggestions.
This would mean the joint venture of Reliance Industriesand BP announced on Tuesday will need a licensefrom the government to start fuel retailing in the country.
The new rules would also allow companies to directly sellfuel to industries without setting up retail fuel stations.
Companies must set up 5% of proposed retails outlets inrural areas within seven months of winning authorisation, thepanel recommends.(Editing by Deepa Babington)
