Private players such as Reliance Industries and Essar — owned by Russia’s Rosneft — have tripled the number of petrol and diesel outlets in India in the last two years, and could double their market share by implementing their ongoing expansion plans, India Ratings said.
From practically nothing in 2014, private players including Shell and BP now account for over 6% of the total petrol and diesel sales in India.
They could easily double this over the coming quarters, going by their expansion plans, and this could pain to incumbents like Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation, the ratings agency said.
“Private oil marketing companies (OMCs) can nibble another 5%-6% of the market share from public sector units in the near term, even if half of private OMCs’ licensed outlets become operational,” the agency said. 
India stopped giving subsidies to government oil companies in 2014, creating parity between the prices of private and state-owned oil companies and increasing competition in the market.
Reliance has increased its pump count in India to 1,400 from 320 in March 2015, pointed out India Ratings, a unit of Fitch.
Essar — which focuses on rural areas as well — now has 3,810 pumps against 1,491 in March 2015.
And they are not stopping their expansion, the agency pointed out.
Quoting industry sources, it said Reliance Industries has a license to open up to 5,000 fuel pumps in India, meaning that it could more than triple its market share just by opening the already approved pumps.
Many of RIL’s pumps are lying idle for the last few years, and the company could operationalize them relatively quickly.
Essar Oil too could reach the 5,000 mark soon, as it has 3,810 operational outlets and another 2,320 under various stages of development.
BP Plc has permission to open 3,500 retail fuel stations and Shell India has permission for 2,000 outlets. Shell operates around 85 as of now.
In a market where quality cannot be taken for granted, private players often manage to attract more sales compared to state-owned companies like Indian Oil and Hindustan Petroleum Corp.
Reliance Pumps, for example, sell an average of around 3 lakh liters per month, while an Indian Oil pump sells only around 1.56 lakh liters per pump. HPCL sells around 1.61 lakh liters per month and BPCL sells around 1.9 lakh liters.
In other words, one pump from Reliance is equivalent to two pumps from the government-owned players.
“Competition (for public sector companies) will intensify as private players continue to expand and corner market share from PSUs,” India Ratings said.
Petrol and diesel are the mainstay for public sector units and account for about 51% of the total petroleum product consumption in India.
The loss of market share has been higher in diesel compared to petrol as private players have been able to make a big impact in the bulk category, such as factories and transportation companies.
Private players have gone to 20-30% of the bulk diesel market from 0% three years ago, the agency said quoting anecdotal evidence.
Bulk diesel sales account for 10%-20% of the total diesel sales in the country.