State-owned oil marketing companies, Indian Oil, Hindustan Petroleum and Bharat Petroleum, are open to buying the land on which their retail outlets are located to offset rising real estate prices, oil minister Dharmendra Pradhan said.
Pradhan was responding to a concern about how rising real estate prices in cities and towns are leading to landlords kicking out oil marketing companies from the land that they have leased for constructing their pumps.
Pradhan said the companies always try to reenter into a lease agreement with the landlord at a higher rate to compensate for the rising value of land. When this is not possible, they are also willing to buy the land off the owner.
“OMCs have informed that they explore the possibilities for a negotiated settlement for renewal of lease/purchase on strength of tenancy protection wherever available,” Pradhan said.
Often, petrol pumps are located right in the heart of the city, on plots that command the highest prices. Real estate prices in India have gone up by 15-25 times in the last thirty years.
While the majority of pumps are operated by contractors on land that is leased by them, there are thousands of outlets that are operated directly by the companies on land leased by them directly.
Some of the leases can be as long as 100 years.
In some states, it is possible for the landlord to cancel the lease even before it expires, while in others, the tenants are protected.
“Where tenancy protection is not available, OMCs make efforts to secure the site based on negotiated settlement for lease or purchase at market rates. In the event of negotiations failing, the OMCs explore available legal options,” he added.