HC blocks oil firms from opening new outlets

KOCHI: The Kerala High Court on Wednesday froze the steps taken by Oil Marketing Companies (OMC) for the setting up new petroleum outlets in the state. The High Court asked the companies such as Indian Oil Corporation, Bharath Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited to constitute a High Level Joint committee to hear objections from existing retail operators against opening of new outlets.A division bench comprising of Acting Chief Justice C N Ramachandran Nair and Justice P S Gopinathan passed the order while considering a petition filed by R Sabarinath, Secretary, Kerala State Petroleum Traders Association and others against setting up of new petroleum outlets.“The committee should consider the objections from existing operators against the opening of new outlets. All steps taken for setting up of new outlets will be withheld until the committee of OMCs decide and approve the justification for opening outlets,” the court held. The court further stated that competition among OMCs for marketing petrol and diesel will not promote any consumer interest and would have only adverse consequences for the companies. The court further stated that the OMCs should only consider the need for a new outlet in an area after assessing the business of the nearest petrol outlets. Going by the guidelines issued by the Union Ministry and the state, the OMCs have no justification in setting up of new petroleum outlets within a radius of five kms in rural areas. The court also asked the oil companies to allot exclusive areas, so that unnecessary competition among the three companies can be avoided.“Wherever the construction of an outlet is completed in all aspects, based on No-Objection-Certificates issued, the OMCs are free to start supply of petrol and diesel. However if it leads to loss for existing outlets then the new outlet should be closed,” the court said and added that findings in the judgment apply only to the public sector OMCs.