Check License Eligibility to Open a Fuel Station

In order to promote the transparency in awarding of petrol pump license and franchise by Oil Marketing Companies, a new dealer selection process has been formulated. Under the new process, the applicant is first checked against pre-established eligibility criteria. All applicants conforming to the eligibility criteria are selected for the next round, wherein lots are drawn or a bidding process is used to select the dealer. Hence, eligibility criteria now play an important role in the determination of the petrol pump dealer. In this article, we look at the petrol pump license eligibility criteria for individuals.

Basic Eligibility Requirement to open a petrol pump

To be eligible to obtain a petrol pump license and start a petrol pump, the individual must be an Indian Citizen and a resident of India, as per the Income Tax rules. To get the resident of India document, an individual must stay in India for 182 days or more in the previous Financial year.

The applicant must also be not less than 21 years old and not more than 55 years. Proof of age of the applicant must be validated by submitting a copy of 10th Standard Board Certificate or Secondary School Leaving Certificate or Birth Certificate or Passport or Affidavit for age or Identity card issued by Election Commission.

What is the minimum education requirement to open a petrol pump in India?

All applicants making an application for a petrol pump dealership must have basic education. Rural petrol pump applicants who are SC/ST or OBC must have passed minimum 10th standard and all other applicants must have passed a minimum 10+2 level of examination. In case of an application under an open category, the applicant must have passed a minimum 10+2 level of examination for rural petrol pumps. For open category applicants other than rural areas, the applicant must have an educational qualification from any of the universities under an Act of the Central or State Legislature in India or any other educational institution under an Act of Parliament or to be as Deemed University.

Hence, for open category applicants other than rural areas, it requires a Graduation in any field or Chartered Accountant or Company Secretary or Cost Accountant or Diploma in Engineering.

How much investment is required to get a petrol pump license in India?

To start a petrol pump, the applicant must show the ability to invest a minimum of Rs.25 lakhs in case of regular petrol pumps and Rs.12 lakhs in case of rural petrol pumps. The funds for investment can be in the following forms:

Funds in savings accounts, deposits with Bank/Registered Companies/Postal Schemes
National Savings Certificates, etc
Bonds
Shares of listed Companies in Demat Form
Mutual Funds

It's important to note that cash, jewellery, etc. for which ownership cannot be established will not be considered. Also, the balance in the current account will not be considered. For shares, mutual funds and bonds, only 60% of the value will be considered. Obtain the valuation certificate for the assets from a Chartered Accountant.

Land requirement for petrol pump dealership:

The land is a major criterion in the selection of petrol pump dealers. The applicants are first classified into two groups as follows:

Land should be on National Highway
Applicants having a suitable piece of land in the advertised location/area either by way of ownership / long term lease.
Applicants having Firm Offer for a suitable piece of land for purchase or long term lease.

Based on the above classification, different types of documents must be submitted by the applicant to prove ownership of the Land or intent to purchase. The area of the land must be as per the requirements specified in the advertisement. If the applicant is selected for petrol pump dealership, he/she has to make available the offered land in a developed manner up to the road level by cutting/filling, with good earth, layer-wise compacted as per standard engineering practices. The selected applicant requires to provide a retaining wall and compound wall of the minimum height of 1.5 meters, designed as per site conditions.

The above are some of the major criteria for providing petrol pump license. Applicants satisfying these criteria will be allowed to progress to the next stage, wherein the final decision is made based on a draw or lots or a bidding process.