petrol pump business plan in pakistan

How To Open Petrol Pump In Pakistan?

When it comes to starting a business, the most important factor to consider is the availability of funds. Previously, establishing a gas station (also known as a petrol pump) in Pakistan required a large financial investment and was seen as a business for Pakistan’s wealthy and influential. However, since 2002, when local private OMCs were allowed to set up sites across Pakistan, building a gas station and getting into the oil retail sector has become easier and more financially viable. A person can now buy a franchise of a private Ltd OMC for as little as Rs. 200,000/-, however OMCs with a solid reputation continue to charge more.

• The cost of obtaining No Objection Certificates (NOC) from various organizations/government departments, as well as the cost of commercializing the land on which the pump will be built.
• The cost of the gas station’s construction, which includes the cost of civil work, materials, and so on.
• Costs of infrastructure development such as a canopy, tanks, and flooring tiles, among others.
• Dispensers, generators, and other machinery require money.
• Working capital is required to purchase petroleum products for resale.

So, here’s the million-dollar question: how much money is required to construct a petrol station in Pakistan?

The solution is entirely dependent on you and your preparation. A low-cost petrol station with no canopy and rudimentary facilities and machinery might cost anywhere between 6 and 10 million rupees. A typical petrol station with a typical configuration will cost between $10 and $20 million. It will cost you more than 20 million rupees to 45 million rupees to build a hefty site with all the standards and state-of-the-art machinery.

These figures are for places outside of major city regions, and land costs are not included. If you wish to open a filling station in one of Pakistan’s main cities, it will cost significantly more than these estimates due to the commercialization of land, which is far more expensive within the city limits and can cost up to tens of millions of rupees.

Is it profitable to run a fuel station in Pakistan?

Operating a single Shell service station, or a group of Shell service stations, is a significant commitment. Because many of our service stations provide a variety of fuel and non-fuel products and services and are open 24 hours a day, 365 days a year, you’ll need to be confident in your team’s ability to provide world-class service at all times.

You will set the standard for the business under your control if you are motivated and well-organized. You’ll need to be able to think creatively, inspire professionalism, and work well with a wide range of individuals, including your customers. Remember that getting their repeat business is critical to your success; it will be up to you and your staff to impress them with service, uniqueness, and innovation.

You contribute your talents, business approach, excitement, commitment, and passion for innovation as a self-employed retailer, while we provide the service stations, fuel, assistance, and a thorough retailer-training program. In a nutshell, we’ll collaborate to expand the company in an open and honest manner.

• You will be compensated based on your achievement of goals.
• Increase your revenue by expanding your firm and exceeding projected sales while keeping expenditures under control.
• Shell will decide the service station’s core product line and will own all stock.
• To run the service station, you will hire and manage your own employees.

Returns on investment

Your earnings will vary depending on the type and number of stations you operate, as well as their locations, but you can expect to earn between PKR 2,500,000 and PKR 3,500,000 per year in year one (for a single site), with the possibility of higher earnings if you exceed targets and keep costs under control.

We’ll need a bank guarantee as a kind of security. The amount depends on the features of the site/cluster and the findings of your credit assessment. In order to fund your business and purchase initial shares, you may need a working capital amount.

Supporting your success

At first, you’ll get supervised work experience and an on-the-job training program at a Shell service station that’s specifically suited to your needs. As you grow, we’ll tailor a series of training courses to help you improve your skills.

Still Have Questions? Please see the section below:

I’d like to start my own company, but I’m not sure if I have the necessary experience. What credentials do I require?

There are no formal requirements, although the ideal candidate will have at least a bachelor’s degree and/or five years of work experience. To succeed, you’ll need dedication, drive, business acumen, and a passion for invention. Working capital will be required, as well as security in the form of a bank guarantee.

You will be given supervised work experience as well as a series of training sessions that are specifically customized to your needs.

You will be required to offer financial security in the form of a PKR 1,000,000 bank guarantee due to the nature of the business. The amount of operating capital that may be required varies depending on the cluster/location site’s and size.

It’s anticipated that the selection process, business planning, and training course will take three to six months (depending on the location of service station or clusters).

Your revenues will vary depending on where you operate and how many service stations you have, but you may expect to earn between PKR 2,500,000 and PKR 3,500,000* each year in year one (for a single station), with the possibility of more if you meet your targets and keep your expenditures under control. Please keep in mind that all values are estimates.

Disclaimer: The earnings statistics listed above represent the estimated range for a single-station retailer. They are not guaranteed, and real revenues may differ depending on a variety of factors, including cluster size and site efficiency. If you are chosen to run a Cluster, the size of the Cluster will depend on the number of sites available.

How much money can you make at a petrol station in Pakistan?

“Your income will depend on the type and number of stations you run and their locations,” according to Shell Pakistan’s website, “but you can expect to earn between PKR 2,500,000 and PKR 3,500,000 per annum from year one (for a single site), with the possibility of additional earnings if you exceed.”

How do I start a gas station in Pakistan?

When considering the business viability and future profitability of a petrol pump station in Pakistan, there are various things to consider.

• The land and pumping stations are in the same location.
• Using the services of competent legal and financial counsel,
• Strive to provide the best services possible while utilizing the most cutting-edge technology available.

With the current market structure in mind, the most critical of these factors to give you the best chance of success is to provide the highest possible quality of service to your clients in order to achieve a competitive advantage.

• The country’s population is rapidly expanding, as is its per capita income and the sheer quantity of cars and other vehicles it presently has.
• During the winter, the low pressure of gas gives a diesel and petrol filling station a considerable advantage over a CNG station.
• Demand for all petroleum products is increasing, even in neighboring nations like Afghanistan.
• Because the demand for all petroleum products is elastic, it remains constant.
• The search for a variety of oil sources.

From a legal standpoint, this business entity’s proposed structure is that of a franchise with either a sole proprietorship or a joint proprietorship. While the entrepreneur’s choice affects this decision, the feasibility report is often based on the franchise having a single owner.

An entrepreneur must pay a joining fee as well as a security deposit in order to join an OMC as a dealer/retailer. The membership fee is typically around Rs.100,000, with a security deposit of around Rs.300,000 (these fees keep varying and changing over time).

The franchise fee is paid to the OMC on a regular basis. This price is normally between 0.10-0.15Rs per litre of petroleum delivered by the company. This is countered by the fact that the OMC is responsible for all equipment, machinery, and ongoing maintenance, which does not come out of the franchisee’s pocket.

On the same principle, other amenities such as the aforementioned car wash, tuck shop, and tyre shop can be constructed. The car wash and tyre shop fees are approximately 0.02-0.03 rupees per litre.

*These fee estimates are solely meant as a guideline and may vary depending on the terms of the franchisee’s agreement with the OMC. These projections are also altered throughout time.

The franchisee, like the OMC, receives a portion of the earnings from every litre of gasoline or diesel sold. OGRA, the Oil and Gas Regulatory Authority, decides and regulates this percentage. The percentage will normally remain constant, but the value will range between 0.85 and 1.50 rupees per litre of fuel and about the same for diesel.

The process of opening a fueling station entails a few key procedures that must be followed in order to meet the requirements of both the oil marketing corporation (OMC) and the government.

An oil marketing company receives a written application (expression of interest) from an entrepreneur interested in becoming a franchisee (OMC). The applicant requests that the OMC evaluate his property for the purpose of retailing petroleum and lubricant products.

Following the initial survey, OMC examines the applicant’s credibility (both social and financial) and talents, and then an expert from OMC conducts a feasibility assessment to determine the viability of the applicant’s land in relation to its location. After meeting the project’s feasibility criteria, OMC enters into a retailer ship agreement with the applicant and leases his land to him for a minimum of 15 years. The rent is a small amount determined by the land’s location.

Following the signing of the agreement, OMC’s architects create a plan for the site that depicts the projected structure of the site in accordance with national standards. The application, along with the map, is then forwarded to the district coordinator officer (DCO) in order to obtain no objection certificates from the relevant departments for this project. The DCO convenes a consultative meeting with representatives from the relevant departments to critically evaluate the project and communicate whether or not they have any issues. The DCO gives a no objection certificate for the required project based on the opinions of all representatives.

The explosives department is in charge of giving licenses for the storage and sale of explosive (petroleum) products. Finally, the OMC submits an application for a license to the Department of Explosives. The NOC and the sight map provided and approved by the DCO are included in the application.

After receiving authorization from the explosives department, development on the infrastructural structure will begin according to the approved map. The entrepreneur and the OMC split the cost of the infrastructure. The firm covers the entire cost of the machinery and equipment, while the entrepreneur is responsible for the civil work. Following completion, an OMC specialist engineer inspects the site. The OMC’s engineer issues a certificate of “safety and completion” to the sight that was built according to the regulations.

The explosives department’s inspector of explosives conducts a sight inspection as the last and last phase. The inspector conducts a thorough inspection of the site (particularly the gasoline storage tanks) in accordance with the explosives department’s predetermined rules before granting the franchisee (entrepreneur) permission to begin his operation.

Based on double-shift services, the station’s yearly sales capacity should be 2.85 million litters of gasoline and diesel. For financial projections, capacity utilization will be at 80% in the first year, then increase at a rate of 5% per year until it reaches 95%.

The overall land needed for the project would be 15,000 square feet, which would include a car wash, tire store, and office structure.

The Fueling Station should be located near a populated region, taking into account other important factors such as human resource availability, electricity, and water. For this aim, a site in the heart of the city would be ideal, ensuring that a healthy population surrounds the fueling station as well as the necessary infrastructure.

Are petrol station owners well-off?

Q. How much does a gas station owner make? In India, a fuel station owner can make up to Rs 3,58,000 per month. Your monthly gross earnings will be 5,70,000 Rupees if your commission is 3 Rupees per litre.

What is the profit in a gas station?

Is it profitable to own a gas station? A petrol station, as we all know, is open 24 hours a day, seven days a week, and you may easily make a profit of 2 to 2.5 rupees per litre on petrol and 1.80 to 2.40 rupees per litre on diesel. The monthly profit ranges from 1 to 2 lakh rupees.

In Pakistan, which small business is the most successful?

The following are the top ten small enterprises in Pakistan that can generate large profits:

• Agribusiness is a type of business that is based on agriculture.
• Establish a restaurant.
• Open up a coffee shop.
• E-commerce is a type of business where products are sold online.
• Agency for real estate.
• Services for digital marketing.

How do I go about starting a gas station?

Not only in India, but around the world, the petrol pump business has traditionally been regarded as one of the most profitable. This is largely due to the transportation and logistics sector’s ever-increasing growth and resulting demands. Another obvious cause is the rising demands of the average person’s daily commute. Furthermore, in today’s world, owning a vehicle is nearly a need for a middle-class individual to secure his comfort and convenience in day-to-day living.

As a result, starting your own fuel pump business is a viable alternative in today’s world. Despite the fact that it entails a significant amount of legal duties and paperwork, it is one of India’s most profitable enterprises. Furthermore, Oil Marketing Companies (OMCs) want to create more feasible prospects in order to support the growth of the petrol pump sector in India in 2020-2021.

The following is the procedure and formalities for opening a petrol pump business in India:

What is Pakistan’s most profitable business?

Pakistan’s economy is complicated. There are some booming businesses and some that are faltering due to government corruption, but there are still many fresh company ideas for Pakistanis to consider because the country has a large number of competent and talented workers. There is a business concept for you out there, from the footwear industry to supplying meals to the underprivileged, car parts manufacturing, and so on.

Many investors have large sums of money in their accounts, but they are unsure about which business to pursue. Such people frequently invest their money in less profitable company initiatives, and their investments generally fail to meet their expectations. There isn’t a single profitable enterprise in Pakistan. Pakistan’s business market is quite varied. Market trends change throughout time, resulting in new opportunities.

How much money does it take to open a gas station?

To open a petrol station, the applicant must be able to invest a minimum of Rs. 25 lakhs in standard gas stations and Rs. 12 lakhs in rural petrol stations.

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Josh and Mak International

Redefining Legal Excellence, Embracing Digital Horizons

Legal Advice on Petrol Pump Contracts with Oil Marketing Companies

Due to the overwhelming amount of queries, we keep getting, we have set out a basic guide for setting up a petrol pump in Pakistan. If you wish to Open a Petrol Pump, t hen please DO NOT call us or contact us.

Instead please try to google the marketing companies like Shell, PSO, Attock Petroleum, etc for more information as they all have their own requirements. We will not give out numbers or contact representatives of Marketing Companies, as this is not what are able to do.

How can we help you then?

Once you are negotiating the contracts with the company and need help understanding your obligations or the benefits you may get from entering into a contract with an oil marketing company, we can step in and assist you.

There are several factors to consider when proposing to open a petrol pump station in Pakistan in terms of both commercial viability and future success.

• The location of the land and the pumps,
• Engaging the services of quality legal and financial teams,
• Endeavour to offer the best services and use the best technology currently available.

Keeping in mind the current structure of the market, the most important of these factors to give you the best chance of success is providing the best possible quality of service to your customers to gain a competitive edge.

General legal guidance on petrol pump contracts with oil marketing companies in Pakistan.

• Review the Contract: Before signing any contract with an oil marketing company, it’s crucial to carefully review and understand its terms and conditions. Pay special attention to clauses related to pricing, quantity, quality of fuel, duration, termination, and renewal.
• Negotiation: If possible, negotiate the terms of the contract to ensure they are fair and favorable to your interests as a petrol pump owner. Experienced legal counsel can help you in this process and ensure that your rights are protected.
• Compliance: Ensure that your petrol pump operations comply with all relevant laws and regulations governing the oil and gas sector in Pakistan. Your legal advisors can help you understand the legal requirements and assist in ensuring compliance.
• Termination and Renewal: Understand the conditions under which the contract can be terminated by either party and the process for contract renewal. Protect your interests by having clear provisions regarding these aspects in the contract.
• Dispute Resolution:Ensure to include a dispute resolution clause in the contract that outlines the process for resolving any disagreements or conflicts that may arise during the contractual relationship.
• Intellectual Property and Branding: If the oil marketing company provides you with branding and marketing materials, clarify the ownership and permitted use of such intellectual property in the contract.
• Health and Safety: Ensure that the contract includes provisions relating to health and safety standards for the petrol pump operations.
• Insurance: Discuss insurance coverage requirements with the oil marketing company to safeguard against potential risks and liabilities.
• Record Keeping: Establish a clear record-keeping system to maintain all necessary documents and records related to the contract and petrol pump operations.
• Seek Legal Assistance: Engage legal experts like Josh and Mak International to assist you throughout the contract negotiation and drafting process. They can help you understand the legal implications and ensure that your rights are adequately protected.

Petrol Pump Set Up in Pakistan

The Opportunities Available

• A population growing at a rapid rate, the income per capita and the sheer number of cars and other vehicles now in the country.
• The low pressure of gas gives you a diesel and petrol filling station a distinct advantage over a CNG station, especially during the winter.
• The increase in demand for all petroleum products even in bordering countries, especially Afghanistan.
• This demand for all petroleum products is elastic in nature, thus making it constant.
• The exploration for multiple oil sources.

The Legal Status of the Proposed Business and the Viability of Sharing

The proposed structure of this business entity, from a legal point of view, is that of a franchise with either solo or joint proprietorship. Whilst this selection is dependent upon what choice the entrepreneur makes, the feasibility report is typically based on the franchise having a single owner.

The Joining Fee and the Security Deposit

In order to be able to join an OMC as a dealer/retailer the entrepreneur is required to pay both a joining fee and a security deposit.

The Franchise Fee

The franchise fee is payable regularly to the OMC. This fee is paid on every litre of petroleum the company has supplied. This is set off however by the fact that all the equipment, machinery and subsequent maintenance is taken care of by the OMC and does not come out of the franchisee’s pocket.

Additional facilities such as the aforementioned car wash, tuck shop and tyre shop can also be installed on the same basis.

The Franchisees Profit Share

In the same manner as the OMC, the franchisee also gets a share of the profits on the sale of every litre of petrol or diesel. This percentage is both decided and the regulated by OGRA; the Oil and Gas Regulatory Authority. The percentage of this share will usually remain the same but the value can vary from between 0.85-1.50 rupees per litre of petrol and around the same for diesel.

The Licensing Process for the Franchise’s Retail Outlet

LICENSING PROCESS FOR RETAIL OUTLET (FRANCHISE)

The process of opening up a fuelling station includes few essential steps that need to be followed in order to full fill the criteria of oil marketing company (OMC) as well as the government.

Application

An entrepreneur interested in franchisee business submits a written application (expression of interest) to an oil marketing company (OMC). The applicant requests the OMC to asses the feasibility of his land for the purpose of retailer ship of their petroleum & lubricant products.

Feasibility Study

After Initial survey OMC scrutinizes the applicant on the bases of his credibility (both social and financial), & skills, and then a feasibility study is conducted by the OMC’s expert to measure the viability of applicant’s land with respect to its location. After fulfilling the feasibility criteria for the project the OMC signs a retailer ship agreement with the applicant and acquire his land on rental lease for the period of minimum 15 years. The rent is just a nominal amount based on the location of the land.

No Objection Certificates (NOCs)

After signing the agreement the OMC’s architects draw a map for the sight representing the anticipated structure of the sight as per the national standards. The application is then submitted to the district coordinator officer (DCO) along with the map in order to acquire a no objection certificates from the concerned departments for this project. The DCO calls a consultative meeting including the representatives of the concerned departments to critically analyze the project and share if they have some objections or not regarding the project. With the view of all the representatives regarding the project the DCO issues a no objection certificate for the prescribed project.

License of Explosives

The explosives department is a supreme authority for issuing a license to store or sale the explosive (petroleum) items. The OMC finally submits the application to the department of explosives for the grant of license. The application includes NOC and the sight map issued and approved by the DCO respectively.

Construction phase

After the permission of explosives department the infra structure construction is to be started according to the approved map. The cost of infra structure is shared between the entrepreneur and the OMC. The company totally pays for the machinery and equipment and the civil work is the responsibility of entrepreneur. After the completion, the sight is inspected by an expert engineer of OMC. The sight constructed according to the standards qualifies for the certificate of “safety and completion” issued by the OMC’s engineer.

Grant of License

The last and final step is the sight inspection by the inspector of explosives from the explosives department. The inspector critically inspects the site (specially the fuel storage tanks) according to the pre defined rules of explosives department and grants the license to the franchisee (entrepreneur) to start his business.

Suitable Locations

The Fuelling Station is recommended to be installed next to the populated area while considering other mandatory inputs i.e. availability of human resource, electricity and water etc. for the purpose, a location in the main city would be feasible to make sure a healthy number of populations is around the fuelling station along with the compulsory infra structure.

By The Josh and Mak Team

Josh and Mak International is a distinguished law firm with a rich legacy that sets us apart in the legal profession. With years of experience and expertise, we have earned a reputation as a trusted and reputable name in the field. Our firm is built on the pillars of professionalism, integrity, and an unwavering commitment to providing excellent legal services. We have a profound understanding of the law and its complexities, enabling us to deliver tailored legal solutions to meet the unique needs of each client. As a virtual law firm, we offer affordable, high-quality legal advice delivered with the same dedication and work ethic as traditional firms. Choose Josh and Mak International as your legal partner and gain an unfair strategic advantage over your competitors.

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After all of the hullabaloo surrounding the increase in margins, how does the petrol pump business model even work?

If you’ve been to a petrol pump in Pakistan chances are that you’ve seen a lad working at the pump holding a large wad of cash. As a kid you probably thought that the guy is rich, as an adult you come to realize, the guy probably earns the equivalent of 5 litres of fuel (at current prices) in a day – basically peanuts. But this story isn’t about unfair wages, it has more to do with how fuel pumps earn money.

There are various components that help determine the price of fuel in the country. Dealership margins are the margins a dealer (a pump owner in this case) gets. These used to be in the form of percentages but have been fixed per liter.

The past week, thousands of Pakistanis were stuck in line at fuel pumps in hopes of getting fuel. They couldn’t because the petrol pumps were on strike. The only way one could get fuel was if they managed to find a company operated pump, which are a tiny fraction compared to dealer owned pumps. For an understanding of this, let’s take Karachi as an example where there are only 20 company operated (only PSO and Shell, Gas and Oil Pakistan Ltd (GO), Hascol Petroleum Ltd) pumps, whereas the approximate remaining 480 are dealer operated or belonging to companies that participated in the strike.

The Pakistan Petroleum Dealers Association (PPDA) had announced they would go on a strike from Thursday till an indefinite period to demand an increase in the margin on the sale of petroleum products.

Energy Minister Hammad Azhar reacted to the petrol strike, saying that the government will not accept “illegitimate demands” by certain petroleum dealers.

“The government will not hike prices of petroleum products by Rs9 per litre to appease a few companies,” he said.

Petrol pumps used to earn Rs3.91 per litre on petrol and Rs3.30 per litre on diesel. profit made by petrol pumps per litre was 2.75% which the Pakistan Petroleum Dealers Association (PPDA) had demanded be increased to 6%. If this demand was met, the profit made by pumps on petrol would be Rs8.75 per litre and Rs8.5 on diesel.

However, instead, the government negotiated with the dealers and they would now charge Rs 4.90 per liter on petrol. Essentially, an enhancement of 99 paisa in the existing margin of petrol and 83 paisa in the existing margin of high speed diesel.

In a statement, the Petroleum Division said, “The proposal for a 25pc increase in the margin of dealers will cover all delays in the revision of margin in the past and would also help dealers in mitigating the impact of inflation.”

In 2016 the ECC decided that margins will be revised annually by the amount of average CPI. Period for this average change in 2019, however the rule remained the same. Despite that, over the past five years, the margin was only revised four times for petrol and three times for diesel. There have been threats of strikes every time. The last revision in margins took place in April 2021 which was after a delay of 9 months for Petrol. The government, over the past few months has been delaying the revision stating that the PIDE study would be used as a gauge to revise margins. The study, however, is completed yet the government was still not keen to revise rates. In addition, if you link this to the fuel shortage of June 2020, the government’s relation witl fuel pumps isn’t that great to begin with. While inflation remains a concern and with rising fuel prices internationally the government feels compelled to make the fuel pump owners wait, the fact is, the government needed to be more prudent and deal with the situation better. 

The components of petrol price

The price of petrol has various components that combine together and are totaled to reach the ex-depot price, or the price the consumer sees at gas stations. 

The base price is the imported price, in the case of oil imports, or the ex-refinery price in the case of domestic oil production. On top of that, there are retailer and freight costs which include the inland freight equalisation margin, OMC profit margins (what PSO, Shell, etc. earn), and dealer commissions (what the petrol pump owners get to make). Lastly, comes the taxation which includes general sales tax and the petroleum development levy.

The ex-refinery price is the price at which refineries can sell their fuel to OMCs and the price at which importers can sell distillates within Pakistan. One of the first additions that happens to this initial pricing are the commissions that retailers and dealers receive.

The next significant addition is the Inland Freight Equalization Margin (IEFM), which is the cost of inland movement incurred by a refinery for the transportation of crude oil from the source to the refinery. It also includes the cost incurred by an OMC while transporting the finished product to various depots across the country. This basically includes all transport costs within the company.  

The purpose of this margin is to establish and maintain parity in the prices of fuel throughout the country. The money collected from this margin goes on to create a pool. The government then uses this money from the pool to provide indirect subsidies to Pakistanis to ensure the same price of fuel is found throughout the country.

Basically, if this subsidy did not exist, petrol prices would be cheaper in Karachi and more expensive in almost every other part of the country, and especially expensive in Gilgit-Baltistan and Balochistan.

After all of these pricing tools, we finally come to taxes, because the last two additions to the price the consumer sees at the gas station are the general sales tax (GST) and the petroleum development levy.

The GST, as of late, is set at 0% to pass relief on to consumers in light of rising fuel prices globally. However, in the past it was set at 17%. Keeping in mind that it is a ratio rather than an absolute number, it varies with a change in the price of petrol. The levy, on the other hand, is a surcharge and set as an absolute rupee amount per litre, though the government does vary how much it charges under this tax relatively frequently.

It is used as an instrument to bring about stability in the price of petrol by offsetting the impact of drastically changing import prices and costs associated with fuel. The levy, however, is often seen as a political and fiscal tool to either pass on ‘relief’ to consumers during an election year or to generate more revenue in other years. Previously, the levy was priced at Rs15 per litre but it has now been raised to Rs30 per litre.

This means that when the government wants to pass on relief to consumers it could keep a levy of zero rupees or some low number. Essentially, this means that after all the costs are added, the government could increase the price of fuel up to Rs30.

How do petrol pumps earn?

Petrol pumps can be company owned or dealer owned. Dealer owned petrol pumps are where an individual buys a “franchise” of a petrol pump, follows all legal procedures and sells fuel on behalf of an OMC. They earn through the dealership margin. Petrol pumps earn based on how much fuel they sell. Some pumps also earn on the sale of lubricants and other services such as tyre puncture stations, car wash and service area, stores, etc.

As per Shell Pakistan’s website, “Your income will depend on the type and number of stations you run and their locations, but you can look forward to potential earnings of between PKR 2,500,000 and PKR 3,500,000 per annum from year one (for a single site), with the opportunity for additional earnings if you exceed targets and control your costs.”

While these figures are not guaranteed, if you choose to open a fuel station, the company you sign with will provide the fuel and training. In return for your investment and the time you’re putting in to run the fuel station, you’ll get your margin and possibly a bonus or remuneration against meeting sales targets. While fuel prices do add to the inflation of a country, it is important to note that inflation and cost of doing business has also increased for pump owners.

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Petrol Pump Business plan

The petrol pump industry presents a lucrative opportunity within the energy sector. However, establishing a petrol pump business necessitates meticulous planning, substantial investment, and strict compliance with regulatory protocols.

In this all-inclusive guide, we will guide you through the intricacies of launching and operating a prosperous petrol pump enterprise, encompassing critical facets such as expenses, permits, financial backing, and more.

Why Invest in a Petrol Pump Business?

Investing in a petrol pump business is a strategic and potentially lucrative venture for those looking to enter the energy sector. The demand for fuel remains steadfast globally, making the petrol pump industry a resilient and profitable one.

1. Steady Demand for Fuel

One of the primary reasons to consider investing in a petrol pump business is the constant and robust demand for fuel. Vehicles, whether they run on gasoline (petrol) or diesel, continue to be the primary mode of transportation for millions worldwide. As a result, the need for petrol pumps remains evergreen, making it a recession-resistant industry.

2. Profitable Margins

Petrol pump businesses typically offer reasonable profit margins. While the margins may vary due to factors like location, competition, and pricing strategies, petrol pump owners can often maintain a steady income stream. The ability to set competitive fuel prices, coupled with additional revenue streams like convenience stores or car washes, further enhances profitability.

3. Versatile Business Model  

Investors in the petrol pump business can choose from various business models. You can either open an independent petrol pump or opt for a franchise arrangement with an established oil company like Indian Oil, Bharat Petroleum, or Hindustan Petroleum. Each model has its unique advantages, allowing you to tailor your investment to your preferences and resources. 

4. High Initial Investment

While the potential returns in the petrol pump business are substantial, it’s essential to acknowledge the high initial investment required. Opening a petrol pump involves expenses such as land acquisition or lease, construction, machinery, working capital, and regulatory compliance. This is where business financing comes into play.

5. Financing Options

To cover the substantial costs associated with opening a petrol pump, entrepreneurs have access to several financing options: 

Business Loans: Banks and financial institutions offer business loan tailored to the needs of petrol pump owners. These loans can help cover expenses like land acquisition, construction, and equipment purchases. 

Working Capital Loans: Operating a petrol pump requires working capital to manage day-to-day expenses such as fuel purchases, staff salaries, and maintenance. Working capital loans provide the necessary funds to keep your business running smoothly.

Business Loans Without Collateral: Traditional business loans often require collateral. However, many financial institutions now offer collateral-free business loans , which can be beneficial for those who may not have significant assets to pledge.

Line of Credit: A line of credit offers flexibility by allowing you to borrow funds as needed, up to a predetermined limit. It’s a valuable resource for managing fluctuations in working capital and unexpected expenses. 

6. Interest Rates for Business Loans

When considering financing for your petrol pump investment, it’s essential to assess the interest rates associated with business loans. Interest rates can significantly impact the overall cost of borrowing and your ability to generate a profit. The interest rate for a business loan may vary depending on the lender, your creditworthiness, and the prevailing market conditions.

7. Assessing Eligibility for Business Loan

Before applying for a business loan, it’s crucial to understand the eligibility criteria set by the lender. Lenders typically consider factors such as your credit score, business plan, financial stability, and collateral (if required). Meeting these criteria can enhance your chances of securing a loan with favourable terms.

8. Machinery Loan

A machinery loan is designed to help you finance the purchase of essential equipment for your petrol pump. This type of loan can cover the costs associated with fuel dispensers, storage tanks, and other machinery required for your business’s operation. By securing a machinery loan , you can reduce the initial financial burden and manage your cash flow more efficiently.

9. Quick Business Loans

Applying for business loans online can be a convenient and swift process. Online business loan applications allow you to submit your documents and receive approvals faster, ensuring that you can kickstart your petrol pump business sooner. 

Now that we understand the basics, let’s delve into the specifics of starting and running a petrol pump business.

Market Research and Location Selection

Identifying a suitable location.

The location of your petrol pump is a critical factor in determining its success. Consider the following when selecting a location:

High Traffic Area : Choose a spot with significant vehicle traffic, preferably on a busy road or near highways.

Accessibility : Ensure easy access for vehicles entering and exiting the station.

Proximity to Residential Areas : Being close to residential areas can attract regular customers.

Competitor Analysis : Research nearby petrol pumps and their pricing strategies.

Analyzing Competitors: Study the competition in your chosen area to understand their strengths and weaknesses. This analysis can help you differentiate your petrol pump and develop a competitive advantage.

Demographics and Customer Base

Consider the demographics of the area, including income levels, vehicle ownership rates, and commuting patterns. Understanding your potential customer base will help you tailor your offerings and marketing strategies accordingly.

Legal Requirements and Licensing

Obtaining the necessary licenses.

Running a petrol pump business requires several licenses and permits, including:

Petroleum Storage License: Obtained from the Petroleum and Explosives Safety Organization (PESO).

Trade License: Issued by the local municipal authority.

Environmental Clearances: Ensure compliance with environmental regulations and obtain necessary clearances.

Fire Safety Certificate: Comply with fire safety standards and obtain a certificate.

Consult with legal experts or regulatory authorities to have an estimate for petrol pump license cost and to ensure you have all the required permits in place before opening your petrol pump business.

Cost Analysis

Petrol pump opening cost.

The cost of opening a petrol pump can vary significantly based on location, infrastructure, and other factors. Generally, you will need to budget for the following:

Land Acquisition or Lease: The cost of acquiring land or leasing it for your petrol pump station.

Construction and Infrastructure: Building the station, including fuel storage tanks, dispensers, and convenience store (if applicable).

Machinery and Equipment: Purchase of fuel dispensing equipment, pumps, tanks, and safety measures. You can easily apply and avail of a machinery loan from FlexiLoans.

Working Capital: Funds required for day-to-day operations, including fuel purchases.

Reserve Fund: A contingency fund for unexpected expenses or emergencies.

Financing Your Petrol Pump Business

Business loans and financing options.

Financing your petrol pump business can be achieved through various means:

Business Loans : Banks and financial institutions offer business loans tailored to the needs of petrol pump owners. FlexiLoans offers business loans online.

Government Schemes: Explore government schemes and subsidies that support entrepreneurs in the fuel retail sector. FlexiLoans offers business loans for women at attractive interest rates.

Loan Application Process: Understand the application process, eligibility criteria, and documentation required for business loans. Check the estimated business loan interest amount with the business loan EMI calculator .

Business Plan and Structure

Creating a comprehensive business plan.

A well-structured business plan is essential for securing financing and guiding your business. Key components of your business plan include:

Executive Summary : A concise overview of your business and its goals.

Market Analysis : Detailed research on the fuel market and your competitors.

Financial Projections : Projections of income, expenses, and profitability.

Marketing Strategy : Plans for branding, advertising, and customer acquisition.

Operational Details : Information on staffing, inventory management, and daily operations.

Fuel Supply and Dealership

Securing a fuel supply.

Establish a reliable source of fuel supply, often through tie-ups with oil companies like Indian Oil, Bharat Petroleum, or Hindustan Petroleum. This ensures a steady and quality fuel supply for your station.

Petrol Pump Dealership Cost

The cost of securing a dealership from an oil company varies and can include security deposits and infrastructure requirements. Carefully review the terms and conditions before agreeing.

Franchise vs. Independent Operation

You can choose to operate as an independent petrol pump or opt for a petrol pump franchise arrangement with an oil company. Each option has its benefits and drawbacks, so consider your business goals and resources when making this decision.

Infrastructure and Machinery

Building a modern petrol pump station.

Invest in modern and aesthetically pleasing infrastructure to attract customers. The layout should be well-organized for smooth vehicle flow and customer convenience.

Machinery and Equipment Required

Essential equipment for a petrol pump includes fuel dispensers, underground storage tanks, safety measures, and electronic systems for billing and inventory management. FlexiLoan offers a machinery loan at reasonable interest rates.

Maintenance and Safety Measures

Regular maintenance of equipment and safety protocols is crucial to ensure smooth operations and minimize risks associated with fuel handling.

Marketing and Promotion

Branding and signage.

Create an appealing brand identity with eye-catching signage. Your branding should reflect trustworthiness and safety, as customers prioritize these factors when choosing a petrol pump.

Advertising Strategies

Utilize various marketing channels such as social media, local advertising, and loyalty programs to attract and retain customers. Highlight any unique offerings, such as a car wash or convenience store.

Operational Considerations

Staffing and training.

Hire and train staff who are knowledgeable about fuel dispensing, safety procedures, and customer service. Friendly and efficient service can build customer loyalty.

Inventory Management

Implement robust inventory management systems to monitor fuel levels and restock efficiently. Prevent fuel shortages to maintain customer satisfaction. You can always avail working capital loan from FlexiLoans.

Accounting and Record-keeping

Maintain accurate financial records, including sales, expenses, and taxes. Consider using accounting software to streamline your financial processes.

Financial Projections

Estimating income and expenses.

Develop realistic financial projections that take into account your income from fuel sales, convenience store (if applicable), and other revenue streams, as well as operating expenses such as staff salaries, maintenance, and utilities.

Projected Profit Margin

Calculate your projected profit margin based on your business plan and financial projections. This will help you set pricing strategies and assess the profitability of your petrol pump.

Break-Even Analysis

Determine the point at which your petrol pump business will break even, covering all initial investments. This is a crucial milestone in your financial planning.

Risk Management and Insurance

Identifying potential risks.

Assess potential risks in the petrol pump business, including fire hazards, fuel theft, environmental liabilities, and accidents.

Choosing the Right Insurance Policies

Consult with insurance experts to select appropriate insurance coverage, including general liability, property insurance, and environmental pollution coverage.

Environmental Responsibility

Sustainable practices.

Implement environmentally responsible practices such as proper waste disposal, fuel spill prevention, and energy-efficient equipment.

Pollution Control Measures

Adhere to pollution control regulations and regularly inspect your petrol pump for compliance. Report any leaks or spills promptly.

To establish a petrol pump business, you need to consider several factors, including the associated opening costs and crafting a robust business plan. MSME loan without collateral and small business loan can provide financial support for entrepreneurs.

Q1. How do I obtain a license for a petrol station?

Ans: State authorities may obtain a license to own and operate a petrol station depending on the location of the station, with permission from the state’s municipal corporation department, NOCs, and a copy of the location’s certificate.

Q2. What is the bare minimum needed to launch a petrol pump business?

Ans: According to the location of the retail outlet, a petrol pump startup requires a minimum investment of Rs. 15 lakh and a maximum investment that may exceed Rs. 35 lakh.

Q3. What is the commission for petrol station dealers?

Ans: The commission for petrol station dealerships varies depending on the agency and the location. However, the general commission varies from Rs. 2 to Rs. 5 per liter, and tax, commission, and duty account for nearly half of the cost of petrol per liter.

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Growth from the Petrol Pump Business in Pakistan

Most Pakistani petrol pumps have workers holding a bundle of cash. The tale isn’t about unfair wages but how fuel pumps earn money.

Several factors influence the price of fuel in the country. The earnings received by a dealer are known as merchant margins (or pump margins in this context). Previously, percentages were utilized, but now they are fixed per liter.

What Is the Income From Petrol Pump Businesses in Pakistan ?

Pakistanis have been queuing for fuel at petrol stations for the past week. They couldn’t fill up since the pumps were on strike. A company-owned pump was the sole means to receive Petrol; there were only a few dealer-owned pumps. In Karachi, for example, only 20 pumps are operated by the firm. Dealers or strikes manage the rest. 

The Pakistan Petroleum Dealers Association (PPDA) has declared a strike to demand a more significant margin on petroleum product sales, which will begin on Thursday and last indefinitely.

Due to the petrol strike, the government, according to the minister, will not accept specific petroleum merchants’ “illegitimate demands.”

“The government would not hike petroleum prices by Rs9 per liter just to appease a few corporations,” he remarked.

Let’s Talk About Some Factual Stats Related to Petroleum

Petrol cost Rs3.91 per liter at petrol stations, while diesel cost Rs3.30. Petrol stations earned 2.75% per liter, which the Pakistan Petroleum Dealers Association (PPDA) recommended be increased to 6%. If this demand is reached, petrol pumps will get Rs8.75 per liter, and diesel pumps will earn Rs8.5 per liter.

Petrol will now be charged at Rs 4.90 per liter due to the government’s discussions with merchants. This amounts to an increase in fuel margin of 99 paisas and high-speed diesel margin. 

“The proposal for a 25pc increase in the margin will cover all delays in margin revisions in the past and alleviate the impact of inflation on dealers,” said the Petroleum Division.

The ECC resolved in 2016 that margins would be revised yearly by an average CPI Consumer Price Index portion. In 2019, the regulation remained the same for this average change. Over the last five years, the margin has only been altered four times for Petrol and three times for diesel.

Every time, strike action has been threatened. Petrol’s most recent margin revision occurred in April 2021, 9 months after the last revision. For the last few months, the administration has been delaying the adjustment by saying that the PIDE report would be used to revise margins. Even though the study is complete, the government has yet to be willing to alter rates. Aside from that, given the impending fuel crisis in June 2020, the government’s relationship with petrol pumps might be more beneficial. Although inflation remains a problem, and fuel prices are growing globally, the government believes it must respond responsibly and appropriately.

Components of Petrol Prices

• Ex-depot pricing at stations is calculated by combining the components of the Petrol price. Depending on whether the oil is imported or produced domestically, the base price is either the import price or the ex-refinery price. Then there are retailer and freight costs and inland freight equalization margins. OMC profit margins (the money earned by company-owned pumps) and dealer commissions (what petrol pump owners make). The process concludes with taxes, which include the regular sales tax and the petroleum development levy.
• The cost of delivering crude oil from the source to the refinery is the next substantial contribution to a refinery’s inland freight equalization margin (IEFM). Transporting the finished product to other depots is also included in the cost. This category contains internal transportation expenditures.
• A refinery’s inland freight equalization margin (IEFM), the cost of transporting crude oil from the source to the refinery, is the next significant addition. The cost of transporting the finished product to various depots is also included. Transport costs within the company are included in this category.
• Prices increase in Petrol throughout the country are managed through this margin. A massive pile of money is collected from this margin. The government uses this money to provide indirect subsidies to Pakistanis to ensure that fuel prices are the same all over Pakistan.
• Petrol prices in Karachi would be lower without this subsidy. At the same time, they would be higher in almost every other part of the country, including Balochistan and Gilgit-Baltistan.

Depots By JPPL in Pakistan

JINN Petroleum has settled two depots to fulfill the basic petroleum requirements. One is located in Sahiwal, Punjab, and the other in Hub, Balochistan.

Petroleum Retail Network

Retail marketing is a core focus of the company. This segment operates as both the volume and profit driver of the business and acts as the growth engine for the company.

The main focus is on the development of a strong retail segment that focuses on developing petrol pumps at key locations and adding valued business partners. The journey has already started with establishing a retail network in different provinces and parts of Pakistan.

GSTs & Petroleum Industry

We finally come to taxes because the general sales tax (GST) and the petroleum development levy are added to the Petrol station price after all these tools.

After these instruments, the general sales tax (GST) and the petroleum development levy are applied to the petrol station pricing.

The GST is fixed at 0% to alleviate growing fuel prices. It was previously set at 17%. Because it’s a ratio, it fluctuates with the cost of gasoline—the government levies a duty based on a rupee value per liter. Nonetheless, the premium is fixed per liter.

It is intended to counteract increases in import prices and fuel expenses to stabilize petroleum prices. During an election year, however, the levy is often used to alleviate customers or produce additional revenue. The one-time fee of Rs15 per liter has now been increased to Rs30 per liter.

When it wants to ease customers, the government could maintain a fee of zero rupees or a low number. As a result, if all expenditures are considered, the government may raise fuel prices to Rs30.

The government could keep a levy of zero rupees or a low number when it wants to relieve consumers. Therefore, the government could increase fuel prices to Rs30 after all the costs are added.

Petrol Pumps and its types

There are two kinds of petrol stations: company-owned and dealer-owned. A dealer-owned petrol pump is created when an individual obtains a “franchise” of a petrol pump, completes all legal processes, and sells fuel for an OMC. Dealership margins allow them to profit.

How much a pump earns is determined by the amount of fuel sold. Pumps also make money by selling lubricants and providing other services, including tire puncture stations, car wash facilities, and stores.

Did You Know How Petrol Pumps Earn?

Your earnings are determined by the type and quantity of stations you operate and their location. Still, you can expect a potential annual income of PKR 2,500,000 to PKR 3,500,000 (for a single site) from year one, with the prospect of other revenues if you exceed expectations.” JINN petroleum makes petrol pump investment in Pakistan much easy.

While these figures are not guaranteed, the firm you contract with will supply fuel and training if you create a fuel station. In exchange for your investment and time, you will earn your margin and maybe a bonus or remuneration if you exceed sales targets. Even though fuel prices contribute to inflation, inflation and the cost of doing business have increased for pump owners.

Conclusion: 

If you are looking to invest in petrol pumps, JPPL is the safest choice to invest in. Together, let’s make a well-developed economy.

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Retail Business Opportunity with Shell

If you’re a natural leader with an entrepreneurial spirit and passion for innovation, Shell can offer ­­­­­­­you exciting and rewarding opportunities to operate a network of service stations.

Shell Brings to You an Exciting Entrepreneurial Opportunity

With more than 43,000 outlets serving some 25 million customers globally, Shell is one of the most widely recognized brands in the world – and we’re offering a great opportunity to operate and manage one or more of our service stations.

We understand fuel stations are not just about selling fuel today. Customers are looking for a wide range of products and services, provided by people who will take the time to understand and meet their needs. Consistent, top quality customer service is at the heart of what we do. That's why we're looking for bright, ambitious, business-minded people with a passion for innovation to help take our business to new levels of success.

If this sounds like something you can help deliver, then you could look forward to a great future as part of our select group of Self-employed Retailers.

We will provide you with excellent training and support to help you make the most of your talents.

Please take a few minutes to read through these pages for more information. If this is an opportunity that excites you, please fill out and submit the application form. You can do so by downloading it and emailing it to [email protected]

You can also choose to fill out and submit the form online. After receiving your details we will be in touch to start the application and selection process, which we hope will lead to your successful new venture.

The retail opportunity

Running one or a cluster of Shell service stations is a major commitment. Many of our service stations offer a range of fuel and non-fuel products and services and are open 24/7, 365 days a year, so you will need to be confident that your team can maintain world-class service standards round the clock.

Motivated and well organised, you will set the standard for the business under your control. You will need to be the kind of person who can think innovatively, inspire professionalism and get on with all kinds of people - not least of all your customers. Remember, gaining their repeat business will be absolutely vital to your success; it will be up to you and your team to win them over through service delivery, novelty and innovation.

As a Self-employed Retailer, you will bring your skills, business approach, enthusiasm, commitment and your passion for innovation, while we supply the service stations, fuel, support and a full retailer-training program. In short, we'll be working together to grow the business within an honest, open environment.

• You will receive remuneration on your performance against targets
• Grow the business and exceed estimated sales while controlling your costs, and your income will increase accordingly.
• Shell will determine the core product range for the service station and own all stock. 
• You will employ and manage your own staff to operate the service station.

Returns on investment

Your income will depend on the type and number of stations you run and their locations, but you can look forward to potential earnings of between PKR 2,500,000 and PKR 3,500,000 per annum from year one (for a single site), with the opportunity for additional earnings if you exceed targets and control your costs.

Please note, these figures are not guaranteed.

We will require security in the form of a bank guarantee. The amount can vary depending on the site/ cluster characteristics and the results of your credit assessment. A working capital amount may also be required to fund your business in order to purchase initial stock.

Earnings and numbers of sites may vary and are not guaranteed.

Supporting your success

Initially, you will receive supervised work experience and on-site training program at a Shell service station that is tailored to suit your requirements. As you progress, we will develop your abilities through a series of tailored training courses.

Download and complete an application form and send it to [email protected] OR submit the application form online. We will be in touch after reviewing your application if it is successful.

Still Have Questions? Please see the section below:

I want to run my own business but I am not sure if I have the relevant experience. What qualifications do I need?

No formal qualifications are required, but an ideal candidate will have at least an undergraduate degree and/or five years of work experience. However, you will need the drive, business acumen, passion for innovation and determination to succeed. You will have to provide working capital and have security in the form of a bank guarantee.

I think I have the right qualities, but will I receive training?

You will receive supervised work experience and a series of training programs tailored to suit your requirements. 

What funding will be required?

Due to the nature of the business you will be required to provide financial security in the form of a bank guarantee of PKR 1,000,000. The amount of working capital, which may also be required may vary depending on the location and size of the cluster/ site.

How soon can I be in business?

The selection process, business planning and training course is likely to take around three to six months (depending on the location of service station or clusters).

How much can I expect to earn?

Your income will depend on the location and number of service stations you operate, but you can look forward to potential earnings of between PKR 2,500,000 and PKR 3,500,000* per annum from year one (for a single station), with the opportunity for additional earnings if you exceed targets and control your costs. Please note, these figures are not guaranteed.

* Earnings and numbers of sites may vary and are not guaranteed.

Disclaimer: the earnings figures stated above are the projected range for a Retailer operating a single station. They are not guaranteed and actual earnings may be higher or lower depending on a number of factors, including cluster size and efficiency of site operation. If you are selected to operate a Cluster, the Cluster size may vary depending on the number of sites available.

TravelAsker

What is the cost of setting up a petrol pump in Pakistan?

Travel Destinations

June 4, 2023

By Kristy Tolley

Introduction to Setting up a Petrol Pump in Pakistan

Setting up a petrol pump in Pakistan requires a considerable amount of investment, effort, and time. It involves several legal and regulatory processes, including obtaining licenses and permits and meeting environmental and safety standards. The cost of setting up a petrol pump depends on various factors such as land and location, construction, equipment, fuel and lubricants, staffing, utility bills, and marketing and advertising expenses. In this article, we will discuss the cost of setting up a petrol pump in Pakistan and what factors affect it.

Land and Location Requirements for a Petrol Pump in Pakistan

To set up a petrol pump in Pakistan, you need to have a piece of land that meets the location and size requirements set by the government. The location of the petrol pump should be in a commercial or industrial area, preferably on a main road with easy access and visibility. The size of the land should be at least 2,000 square yards for a single-sided petrol pump and 3,000 square yards for a double-sided petrol pump. The cost of purchasing or leasing land varies depending on the location and the real estate market conditions.

Licenses and Permits Required for a Petrol Pump in Pakistan

To operate a petrol pump in Pakistan, you need to obtain several licenses and permits from the government and regulatory authorities. These include a NOC (No Objection Certificate) from the district administration, a license from the Oil and Gas Regulatory Authority (OGRA), a fire safety certificate, an environmental protection certificate, and a trade license from the local government. The cost of obtaining these licenses and permits varies depending on the type of petrol pump and the location.

Cost of Purchasing or Leasing Land for a Petrol Pump in Pakistan

The cost of purchasing or leasing land for a petrol pump in Pakistan varies depending on the location, size, and real estate market conditions. The cost of land is higher in urban areas than in rural areas. The cost of purchasing land can range from PKR 10 million to PKR 50 million or more, depending on the location and size. The cost of leasing land can range from PKR 200,000 to PKR 1 million per month, depending on the location and market conditions.

Cost of Construction for a Petrol Pump in Pakistan

The cost of construction for a petrol pump in Pakistan depends on the size, design, and quality of materials used. The construction cost includes site preparation, foundation, building structure, roofing, flooring, electrical, plumbing, and finishing. The cost of construction can range from PKR 20 million to PKR 100 million or more, depending on the size and quality of construction.

Cost of Equipment and Machinery for a Petrol Pump in Pakistan

To operate a petrol pump, you need to install various equipment and machinery such as dispensers, tanks, pumps, compressors, generators, and safety equipment. The cost of equipment and machinery can range from PKR 10 million to PKR 50 million or more, depending on the type and quality of equipment.

Cost of Fuel and Lubricants for a Petrol Pump in Pakistan

The cost of fuel and lubricants for a petrol pump in Pakistan depends on the market conditions and the location. The prices of fuel and lubricants are regulated by the government, and the petrol pump owners get a fixed commission on the sale of fuel. The cost of fuel and lubricants can vary depending on the demand and supply chain.

Cost of Hiring and Training Staff for a Petrol Pump in Pakistan

To operate a petrol pump, you need to hire and train staff such as cashiers, pump operators, mechanics, and security personnel. The cost of hiring and training staff can vary depending on the location and the level of experience required. The cost of salaries and perks can range from PKR 500,000 to PKR 1 million per month, depending on the size and location of the petrol pump.

Cost of Utility Bills for a Petrol Pump in Pakistan

To operate a petrol pump, you need to pay utility bills such as electricity, water, gas, and telephone/internet bills. The cost of utility bills can vary depending on the location and usage. The cost of utility bills can range from PKR 200,000 to PKR 500,000 per month, depending on the size and location of the petrol pump.

Cost of Marketing and Advertising for a Petrol Pump in Pakistan

To promote a petrol pump, you need to spend on marketing and advertising such as billboards, flyers, social media, and other promotional activities. The cost of marketing and advertising can vary depending on the target audience and the promotional channels used. The cost of marketing and advertising can range from PKR 500,000 to PKR 1 million per month, depending on the marketing strategy and target audience.

Cost of Insurance and Maintenance for a Petrol Pump in Pakistan

To protect your investment, you need to purchase insurance for your petrol pump. The cost of insurance depends on the type and level of coverage. The cost of maintenance includes regular maintenance of equipment, machinery, and building structure. The cost of insurance and maintenance can range from PKR 200,000 to PKR 500,000 per annum, depending on the level of coverage and maintenance required.

Conclusion and Final Cost Analysis of Setting up a Petrol Pump in Pakistan

Setting up a petrol pump in Pakistan requires a significant amount of investment and effort. The cost of setting up a petrol pump in Pakistan can range from PKR 50 million to PKR 300 million or more, depending on various factors such as land and location, construction, equipment, fuel and lubricants, staffing, utility bills, marketing and advertising, insurance, and maintenance. It is essential to conduct a feasibility study and analyze the market conditions before investing in a petrol pump.

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How to start Petrol pump in Pakistan

• Thread starter aizad
• Start date Jul 23, 2018
• Tags business
• Jul 23, 2018

• Aug 3, 2018

Thanks, bro for sharing such a fruitful information. Hence the legal process is very long and could give a hard time. But the incom is for a lifetime. I'm also thinking to start a reliable business. But my budget is low with no experience. So I'm looking for a partner who could invest 50% and share his experience. Lets see, What will be the outcome.  

Administrator

• Apr 26, 2019

Faraz said: Thanks, bro for sharing such a fruitful information. Hence the legal process is very long and could give a hard time. But the incom is for a lifetime. I'm also thinking to start a reliable business. But my budget is low with no experience. So I'm looking for a partner who could invest 50% and share his experience. Lets see, What will be the outcome. Click to expand...

Badsha khan

• Sep 30, 2019

• Apr 27, 2020

To whom someone contact for New Petrol Pump process (If he has good location)  

• Jul 9, 2020

stabbas said: To whom someone contact for New Petrol Pump process (If he has good location) Click to expand...

• Mar 26, 2021

I guess you need to have lots of money and back of some politicians. That's it  

• Nov 29, 2021

To buy something or to set up a new business is not easy anymore. With an 8.4% inflation rate in Pakistan and higher taxes, it will be a tough call to start a new business setup.  

• Nov 30, 2021

Ume.Habiba said: To buy something or to set up a new business is not easy anymore. With an 8.4% inflation rate in Pakistan and higher taxes, it will be a tough call to start a new business setup. Click to expand...

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A network of over 1,200 Retail Outlets across Pakistan.

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Network of over 1,200 retail outlets in pakistan..

Gas & Oil Pakistan, the fastest growing Oil Marketing Company (OMC), having a network of over 1,200 retail outlets in Pakistan providing Petrol, Diesel & Lubricants.

To contribute towards making our country a better place to live in by creating and maintaining an efficient, safe and sustainable To contribute towards making our

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Gas & Oil Pakistan is proud to be the first OMC in Pakistan to lauch electric vehcile charges. The first of thes charges have been installed at GO company owned & company operated (COCO) retail outlet in Lahore. GO plans to install more electric vehicle charges at other retail outlets on highways and motorways across Pakistan.

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OIO has been serving its valued customers for the last 40 years as Protection Specialist by providing Quality Lubricants for all types of vehicles. OIP is also renowned manufacturer of Transformer Oil and Indsutrial Lubricants. Our State-of-the-art Lube Oil Blending Plant in Karachi has the latest equipment for Blending, Testing and Online Filling. Our dealer network is spread in all the major markets of Pakistan. WAPDA, PEL, POF Wah, Pakistan Rangers are our satisfied corporate customers.

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Petrol Pump Business Plan in India: A Step By Step Guide for Investment/Cost, Profit Margin, License/Permits, and Requirements

Table of contents, how much does it cost to open/start a petrol pump in india, time for building a petrol pump in india, requirements for starting a petrol pump business in india, business plan for starting a petrol pump in india, insurance requirement for opening a petrol pump in india, license/permits to open and operate a petrol pump business in india, how to market your petrol pump business in india, how to buy a petrol pump with no money down in india, profit margin in petrol pump business in india, how much does a petrol pump owner make per day in india, can a foreigner open a petrol pump in india, 9 tips to be successful in the petrol pump business in india.

Petrol pumps in India are a very lucrative business opportunity. In India, with a population of over 1.4 billion people and a growing economy, the demand for petrol is always high. Moreover, with the recent government initiative to promote electric vehicles, the petrol demand will only increase in the future. Apart from this, many middle-class people are buying vehicles the numbers keep growing every year. If you want to open/start a petrol pump business in India, this blog post will walk you through investment, license, building cost, profit margin, and business plan.

Petrol pump business plan in India

• The cost of the land/location on which the pump will be built.
• The cost of construction and outfitting the pump with the necessary equipment.
• The cost of licenses and permits required to operate the pump.
• Ongoing costs, such as electricity, labour, and maintenance, are associated with running the pump.

Assuming you already own the land on which to build the petrol pump, the construction cost will vary depending on the size and location of the pump. A small pump in a rural area will cost less to construct than a large pump in a major city. Outfitting the pump with all of the necessary equipment will also add to the cost. The cost of licenses and permits will depend on the state where you plan to open and operate the pump. Each state has its own requirements for licensing and permits, so it is important to research these costs in advance.

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Finally, ongoing costs, such as electricity, labour, and maintenance, are associated with running a petrol pump. These costs will vary depending on the size and location of your pump, but they can be significant expenses nonetheless. In India, usually, there will be a bidding process with each petroleum company (such as HP, BP, IOCL, and SHELL). The average cost of a petrol pump, including everything, will be around 1.5 cores to 2 crores (Again, this will depend on location, size and product offered). 

Building a petrol pump in India can take anywhere from six weeks to three months, depending on the location and other factors. The process typically starts with finding a suitable piece of land to build the pump. Once the land is secured, construction can begin. Building a petrol pump requires many materials and components, all of which must be sourced and put together correctly. Therefore, building a petrol pump in India depends on how quickly these materials and components can be sourced and assembled.

In some cases, building a petrol pump in India can be a relatively quick and easy process. However, there are often delays due to problems with sourcing materials or putting everything together. These delays can lengthen the process significantly, making it take anywhere from six weeks to three months to complete.

• You must be 18 and have a valid Indian passport/Aadhar/Residential proof. 
• You must have a minimum of Rs. 10 to 50 lakhs in capital investment.
• You must obtain a No Objection Certificate (NOC) from the oil company with which you wish to enter into an agreement for fuel supply. 
• You must obtain a Retail Outlet Dealer Agreement (RODA) from the oil company. 
• You must obtain a license from the Petroleum and Explosives Safety Organization (PESO). 
• You must construct a petrol pump premises as per the specifications/instructions laid down by the oil company and get it approved by PESO. 
• You must install equipment at the petrol pump premises per the specifications laid down by the oil company and get it approved by PESO.
• You must apply for registration of the retail outlet with the concerned Regional Transport Office (RTO).
• It is mandatory to have a soil/sand test before constructing a petrol pump on the proposed land.
• You must also have clearance from the environmental board.

If you are planning to open/start a petrol pump business in India, it is important to have a detailed business plan. This will help you to track your progress and ensure that your business is on track. There are multiple factors to consider when creating a business plan for your petrol pump business. These include the investment required, the location of your petrol pump, the target market, the competition, and the marketing strategy.

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• Investment: The investment required to start a petrol pump business in India can vary depending on the size and location of the petrol pump. A small petrol pump may require an investment of around Rs 2 lakhs, while a larger one may require an investment of up to Rs 10 lakhs. Therefore, it is a must to have a clear idea of the investment required before starting the business.
• Location: The location of your petrol pump is another important factor to consider. It is important to choose a location that is easily accessible to your target market. You should also consider the competition and the feasibility of setting up your petrol pump at the chosen location.
• Target market: Your target market should be clearly defined in your business plan. This will help you determine the best marketing strategies to reach your target market. You should also consider their needs and requirements when choosing the products and services offered at your petrol pump.
• Competition: It is important to research your competition before starting your petrol pump business.

In order to open a petrol pump in India, you are required to have insurance in place. This is to protect you and your customers in case of any accidents or mishaps. You will need to consider a few different types of insurance, and we have outlined them for you below. Public liability insurance is a very important type of insurance for a petrol station owner. This will cover you if someone is injured or their property is damaged due to your business operations.

It is important to ensure that your policy limit is high enough to cover any potential claims that could be made against you. Product liability insurance is another type of insurance coverage you should have. This will protect you if one of your products causes injury or damage to someone. For example, if you sell petrol and it is contaminated and causes an accident, this policy will cover the costs associated with the accident. Property damage insurance is also important for a petrol station owner.

This will cover the costs of repairing or replacing any equipment or property damaged due to your business operations. For example, if a fire breaks out at your station, this policy will pay for the damages caused by the fire. Finally, business interruption insurance is another type of coverage that can benefit a petrol station owner. This policy will pay for lost income if your business stops operations due to an insured event, such as a fire.

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To open and operate a petrol pump business in India, you will need to obtain a license from the Indian Oil Corporation (IOC). The IOC is the national oil company of India and is responsible for issuing licenses for petrol pumps. You must submit an application form and the required documents to apply for a license. Once your petrol pump application is approved, you will be issued a license which will allow you to open and operate your petrol pump business in India.

In addition to the license from the IOC, you will also need to obtain other permits and approvals from the local authorities to open and operate your petrol pump business. These may include building permissions, fire safety permissions, environmental clearances, etc. Once you have obtained all the necessary licenses and approvals, you can start your petrol pump business in India. 

As the Indian economy continues to grow, so makes the demand for petrol and diesel. This has resulted in a tremendous boom in the petrol pump business in India. However, with so many new players entering the market, it is becoming increasingly difficult to stand out from the crowd. Here are a few tips on marketing your petrol pump business in India: 

• Use traditional marketing methods: Traditional marketing methods, such as print and television advertising, can effectively reach potential customers.
• Use digital marketing: In today’s digital age, it is important to use digital marketing tools such as social media and search engine optimization (SEO) to reach potential customers. 
• Offer discounts and loyalty programs: Offering discounts and loyalty programs are a great way to attract and retain customers. 
• Use word-of-mouth marketing: Word-of-mouth marketing is still one of the most effective marketing tools. Make sure your current customers are happy with your service so that they can spread the word to others.

In India, petrol pumps can be bought with no money down through various methods. The most common method is to lease the petrol pump from an oil company. This option is available to those who need more money to buy the pump outright. Another option is to take out a loan from a financial institution.

This option may be more expensive in the long run, but it allows you to purchase the pump with no money down. A number of government schemes also provide financial assistance to those wanting to purchase a petrol pump. However, these schemes usually require that the applicant has a certain amount of land or property to offer as collateral.

The petrol pump business in India is highly competitive with very thin profit margins. The average profit margin for a petrol pump in India is between 1% to 2%. This means that for every Rs. 100 worth of fuel sold, the petrol pump owner earns only Rs. 1 to Rs. 2 as profit. Several factors contribute to the low-profit margins in the petrol pump business in India:

• The fuel cost constantly fluctuates, making it difficult to maintain stable prices at the pumps.
• The commission charged by oil companies on fuel sales is also quite low.
• Overheads such as rent, electricity, and staff salaries eat into any profits that are made.

Nevertheless, despite the low-profit margins, petrol pump owners continue to do good business in India thanks to the country’s large population and ever-growing economy.

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There is no definitive answer to this as the profit per day depends on how much petrol o diesel is sold. Again this will be based on the operation’s location, traffic, and size. For example, if the petrol pump sells 50,000 liters daily, the profit would be around Rs.10, 000.  

India is a land of opportunity for foreign investors. The Indian government has been opening up the economy to foreign investment and many sectors are now open to 100% foreign ownership. This includes the retail petrol sector. So, if you’re a foreign national interested in setting up a petrol pump in India, you can do so! However, there are certain things to keep in mind.

Firstly, you’ll need to obtain a license from the Indian Petroleum and Natural Gas Regulatory Board (PNGRB). This can be completed by filling out an application and providing supporting documents. Once you have your license, you’ll also need to find suitable land to build your petrol station. Setting up a petrol pump in India may seem hard at first, but with careful planning and research, it can be a smooth and successful venture!

• Know your target audience : It is important to know who your target audience is before starting a petrol pump business in India. This will help you decide on the location, fuel type, and other factors that need to be considered. 
• Get the required licenses : Before starting a petrol pump business in India, make sure that you have all the required licenses from the state and central government.
• Find a good location : A petrol pump should be located with a good footfall of potential customers. The location should also be easily accessible and have good connectivity.
• Invest in good quality equipment : Make sure that you invest in good quality pumps and other equipment to give your customers a positive experience. 
• Offer competitive prices : To attract customers, it is important to offer competitive prices for fuel and other services that you offer at your petrol pump. 
• Provide excellent customer servic e: Make sure that you provide excellent customer service so that your customers return to your petrol pump.
• Promote your busines s: Use various marketing channels to promote your petrol pump business so that more people know about it. 
• Keep your premises clean and tidy : First impressions matter; hence, it is important to keep your premises clean and tidy at all times. This will give a good impression to potential customers. 
• Be proactive in dealing with problems .

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The petrol pump business is profitable in India. However, the demand for petrol may go down as the Indian government has decided to move towards electric vehicles. The move comes as a part of the government’s plan to reduce air pollution and dependency on imported oil. So we wish you good luck in your next petrol pump/bunk business in India. If you plan to open a gas station business in the following states/cities, this article will help you reach your business goals.

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I would like petrol pump business in kerala, palakkad, chittur. Kindly provide all informations at your best.

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Renewed protests in AJK are unjustified 

Echoes of antiquated stratagems , youm-e-takbeer: the day paec made the nation proud , malik riaz is in a mess of his own making , lying on tables not allowed, ch ashiq elected as chairman of apnsf, traffic comes to standstill in lahore as car drives in opposite…, fathers and sons, russia to remove taliban from ‘terror’ list: state media, digital boom elevates china to no. 2 spot in terms of…, li urges china, japan, rok to reject external disruption, cpc leadership reviews measures to further energize central region, defuse financial…, putin arrives in uzbekistan, third foreign trip since re-election, pakistan football league set for launch next month, watch: words of encouragement from srh owner kavya maran after ipl…, gary kirsten given authority of final say on team’s vice-captaincy issue, shahid afridi reaches out to shadab khan following his worst bowling…, rain expected to disrupt third t20 between pakistan and england at…, crackdown on illegal petrol pumps begins in peshawar.

PESHAWAR: The district administration of Peshawar has launched a crackdown on illegal petrol pumps, arresting owners and taking their dispensers into official possession.

On directives from the provincial government, district administration officers initiated an operation against the sale of smuggled petrol. They sealed 21 dispensers and arrested their owners to begin legal proceedings.

The sale of smuggled petrol through illegal pumps has become an attractive business, leading to the establishment of such dispensers across the district.

A few days ago, the Petroleum Dealers and Carriage Association protested against the operation of illegal petrol pumps and went on strike.

However, after successful negotiations, the district administration agreed to take action against these illegal petrol pumps.

Smuggled, substandard petrol is not only harmful to vehicle engines but can also cause sudden accidents.

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Climate investor Tom Steyer: ‘I’m 100% sure that bringing children into this world is still the right thing to do’

I hope that by now you’re a climate optimist, too. We have a huge fight ahead of us, and the fossil fuel industry isn’t going to fade away quietly. But the tide has already turned. Thanks to new technology, increased public awareness, new laws and rules, and new ways of measuring and understanding the impact of greenhouse gas pollution on our planet, the clean energy revolution hasn’t just begun—it’s become unstoppable.

Oil and gas companies will fight tooth and nail to delay it. But even they know it can’t be reversed. Still, as much as I would like to say that we don’t have to worry about climate change harming, and perhaps even defining, the future of a child born today, that just wouldn’t be true.

Optimism doesn’t mean blissful ignorance, and looking at the science, it’s clear that we’re far from out of the woods. In fact, we’re still making the crisis worse. Each year that we pump more greenhouse gas into the atmosphere than we can sequester, we further disrupt natural systems that human beings have depended on for millennia, unleashing even more extreme weather events—from heat and drought to hurricanes and wildfires—that have already become frighteningly routine. To put it simply, the longer we continue to burn fossil fuels on a massive scale, the worse our future will be.

And not just for as-yet-unborn generations. Recently, I had a conversation with a friend about my age. He said, in essence, that climate change is real, and caused by human beings, but that it’s going to be the next generation’s problem. All I could think was, seriously? Tell that to people in Arizona, Texas, Vermont, and Hawaii. Or Libya, Greece, Pakistan, and Canada. A warming earth claimed victims in each of those places last year alone—and the full list of such places would be far longer. Climate change is here, and even if it doesn’t kill you or drive you from your home, it’s going to affect you no matter where you live.

At the same time, however, the global nature of the threat also means that there’s a worldwide opportunity to help defeat it. Nowhere is the adage that “anyone can make a difference, and everyone should try” truer than in climate.

Which brings me to the other reason I’m 100% sure that bringing children into this world is still the right thing to do. Embedded in the idea that the best response to a warming world is to abstain from having kids is the assumption that a human life must, by definition, be a burden on our planet. But that’s just not true. Every day, I work with people who will leave the earth far better than they found it. Earth, and the 8 billion human beings who inhabit it, are very lucky that these people exist and that they’ve chosen to spend their time in the way that they have.

Throughout this book, I’ve highlighted some of the people who have devoted their lives—often after a mid-career change in focus—to fighting climate change. Their activism, ideas, and businesses are making the clean energy revolution possible. But while their stories should give us hope, they can’t be cause for complacency. We’re doing more to stabilize our planet than most people thought possible just a few years ago. And at the same time, the honest truth is that we’re still not doing nearly enough.

While a growing number of brilliant scientists, engineers, business people, activists, and political leaders are devoting themselves to protecting our planet, I would never want you to think we’re going to win on climate because of people who are smarter than you. We’re going to win on climate because of you. Perhaps you read that last sentence and wondered if that’s really true. Can you personally make a meaningful difference? Trust me. You can. In fact, now is the perfect time to change your life in a way that reflects the realities of our changing world. Stabilizing the planet is the fight of our lifetimes—and it’s a fight we need you to join.

How, specifically, can you have the greatest impact? I think it comes down to three areas: personal choices, active citizenship, and purpose-driven careers. By “choices,” I mean the individual actions we take as consumers. There are a lot of small ways you can help reduce humanity’s overall emissions. In its document Actions for a Healthy Planet, the United Nations suggests a dozen ways you can help the world meet the Sustainable Development Goals laid out in 2015. They include everything from buying an electric vehicle to installing an electric heat pump in your house to throwing away less food. These are all good ideas. In many cases, despite the reams of fossil fuel propaganda trying to convince you that doing your part on climate will be expensive, making climate-conscious choices will both save you money and improve your quality of life. Also, the choices you make as an individual do have impacts on overall markets, even in small ways. If you’re an early adopter of cleantech, you’re helping start-ups grow more quickly. If your neighbors see you driving an electric car, putting solar panels on the roof, or saving money with a heat pump, they’re more likely to do the same. For all these reasons, if you want to become a climate person, an easy first step is to ask yourself, “How can I, personally, get closer to net-zero emissions?”

But as I’ve said, while reducing your carbon footprint can be the beginning of the change you make to your life, it can’t be the end. I worry that it’s naïve, and perhaps even counterproductive, to suggest that solving climate starts at home—it makes it seem like climate is purely a matter of personal responsibility, shifting blame to consumers and letting the fossil fuel industry off the hook.

Focusing on individual choices would be like saying, 30 years ago, “Lung cancer is a worldwide public health crisis, so you need to quit smoking.” Quitting smoking is a good thing to do. But it’s not a solution to a global problem, and it’s no match for corporations who make billions of dollars perpetuating that problem for as long as possible.

That’s where citizenship comes in. I’m not referring to the kind of citizenship that comes with a passport. Instead, I use citizenship in the sense of active, engaged participation in your community. Citizenship is what drives collective action, especially in democracies. Which means that harnessing your power as a citizen is one of the most effective things you can do to help stabilize our planet.

Citizenship takes many forms. Among the most direct is to get involved in politics. Party politics has a bad reputation these days—and believe me, I can see why. But as the saying goes, elections have consequences. Consider the most recent presidential race. Joe Biden wasn’t my first choice for his party’s nomination, in no small part because I was running against him. As president, he’s made some climate-related decisions, such as approving the Willow oil project, that I definitely wouldn’t have made. But it’s hard to overstate the impact that American voters had when they elected Joe Biden in 2020—and could have again this year. A bipartisan infrastructure bill that helps modernize everything from mass transit to our power grid. The Inflation Reduction Act, the single biggest investment in cleantech in world history. Denying fossil fuel companies the right to drill on millions of acres in the Arctic, including on public land leased for drilling by the Trump Administration. All this, and so much more, would never have happened if the outcome of the last presidential election had been different. President Biden and his administration have been the strongest proponents of a robust climate response in history. By far. And in this coming election, the difference between two presidential candidates on climate has never more clear. On one hand, you have a president, and a party, determined to build on the successes of a first term—bringing down energy costs, supporting new technologies, and helping get them into the hands of consumers nationwide. On the other, you have a candidate just ready and waiting to put Project 2025 into practice, throttling clean energy, and putting the full weight of the federal government into propping up oil and gas. Donald Trump was the worst climate president in history. He’s promised, proudly, to be even worse if he gets another shot—and the Republican Party is determined to help keep that promise even if Trump himself doesn’t wind up back in office.

Today, you don’t have to love politics to get involved in politics. You just need to care about preserving a livable planet. We can’t afford a four-year-long pause in the clean energy revolution, let alone a giant, fossil fuel–funded step backward. Whether it’s encouraging friends and family to vote, knocking on doors, donating money, using your social media (including the original social media—having conversations) to counter misinformation, or amplifying climate news that helps people understand what’s at stake, there are so many ways to be an active citizen in an election that, in many ways, could be the fossil fuel companies’ last stand.

Also, while presidential politics gets most of the attention, that’s far from the only place where citizenship makes an enormous difference. In some ways, oil and gas has even more influence over statehouses than they do in Congress, because they can hire lobbyists to pursue their interests with less public scrutiny than they’d receive at the federal level. You can help change that. Help cast a light on what’s happening in state government by writing an opinion piece or a letter to the editor. Get involved with a local campaign. Or even run for office yourself.

Nor is citizenship limited to electoral politics. Take my home state of California. These days, we’re a reliably blue state, but putting into place new laws and programs to help stabilize the planet still requires political will. Just last year, our legislature was debating a bill that would require businesses operating in California to disclose its Scope 3 emissions— emissions from every piece of the supply chain. Because just about any company that wants to operate at scale has to do business in California, passing this bill represented a huge potential win for climate measurement not just in the Golden State but around the world.

As usual, the oil and gas industry fought against this initiative with everything they had. What made the difference was the grassroots movement on the other side. Ordinary people, some acting on their own, some through organizations, encouraged local lawmakers to go big. They made sure assembly members and state senators knew that they’d be held accountable if they sided with fossil fuels over their constituents, and that if they did the right thing, a grassroots army would have their back. And while the fossil fuel industry and its allies like to pretend that climate is an issue that only rich, overeducated white yuppies care about, the polling showed that in California—just like in the rest of the country—African Americans and Latinos care more about taking action on climate than any other group.

At the same time, some of the biggest companies in the world stepped up to provide a business counterweight to oil and gas. They understood that being on the right side of this issue isn’t just good for the planet or for future generations—it’s hugely important to their customers and employees. Together, California demonstrated how change happens. These kinds of efforts are taking place around the country and the world. No matter where you live, they’re something you can be part of.

Finally, citizenship frequently doesn’t involve politics and government at all. While small-scale initiatives within a community don’t have the same influence as nationwide or statewide laws, often an effort that begins in just one neighborhood can be the start of something that changes the entire country, or even the world. Whether it’s protesting or organizing in person, or using your platform on social media, there are always opportunities for climate people to be engaged citizens.

Excerpted from  Cheaper, Faster, Better  © 2024 by Tom Steyer. Published with permission of Spiegel & Grau.

Tom Steyer is the founder of Farallon, co-founder of Galvanize Climate Solutions, and the author of Cheaper, Faster, Better: How We’ll Win the Climate War.

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Biden releasing 1 million barrels of gasoline from Northeast reserve in bid to lower prices at pump

FILE - President Joe Biden speaks during a Jewish American Heritage Month event, May 20, 2024, in the Rose Garden of the White House in Washington. The Biden administration says it’s releasing 1 million barrels of gasoline from a Northeast reserve established after Superstorm Sandy in a bid to lower prices at the pump this summer. (AP Photo/Jacquelyn Martin, File)

FILE - Energy Secretary Jennifer Granholm testifies before the House Committee on Energy and Commerce Subcommittee on Energy, Climate, and Grid Security for a hearing on Capitol Hill in Washington, May 1, 2024, on the 2025 Energy Department budget. The Biden administration says it’s releasing 1 million barrels of gasoline from a Northeast reserve established after Superstorm Sandy in a bid to lower prices at the pump this summer. (AP Photo/Susan Walsh, File)

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WASHINGTON (AP) — The Biden administration said Tuesday it is releasing 1 million barrels of gasoline from a Northeast reserve established after Superstorm Sandy in a bid to lower prices at the pump this summer.

The sale, from storage sites in New Jersey and Maine, will be allocated in increments of 100,000 barrels at a time. The approach will create a competitive bidding process that ensures gasoline can flow into local retailers ahead of the July 4 holiday and sold at competitive prices, the Energy Department said.

The move, which the department said is intended to help “lower costs for American families and consumers,″ follows a mandate from Congress to sell off the 10-year-old Northeast reserve and then close it. The language was included in a spending deal Congress approved in March to avert a partial government shutdown.

The Energy Department said the sale of 1 million barrels, about 42 million gallons, was timed to provide relief for motorists as the summer driving season begins.

Gasoline prices average about $3.60 per gallon nationwide, up 6 cents from a year ago, according to AAA. Tapping gasoline reserves is one of the few actions a president can take by himself to try to control inflation, an election year liability for the party in control of the White House.

“The Biden-Harris administration is laser-focused on lowering prices at the pump for American families, especially as drivers hit the road for summer driving season,” Energy Secretary Jennifer Granholm said in a statement. “By strategically releasing this reserve in between Memorial Day and July 4th, we are ensuring sufficient supply flows to the tri-state and Northeast at a time hardworking Americans need it the most.”

White House Press Secretary Karine Jean-Pierre said release of gas from the Northeast reserve builds on actions by President Joe Biden “to lower gas and energy costs — including historic releases from the Strategic Petroleum Reserve and the largest-ever investment in clean energy.″

Biden significantly drained the Strategic Petroleum Reserve in 2022 following Russia’s invasion of Ukraine, dropping the stockpile to its lowest level since the 1980s. The election year move helped stabilize gasoline prices that had been rising in the wake of the war in Europe but drew complaints from Republicans that the Democratic president was playing politics with a reserve meant for national emergencies.

The Biden administration has since begun refilling the oil reserve , which had more than 367 million barrels of crude oil as of last week. The total is lower than levels before the Russia-Ukraine war but still the world’s largest emergency crude oil supply.

The Northeast sale will require that the 42-million-gallon reserve is transferred or delivered no later than June 30, the Energy Department said.

Congressional Republicans have long criticized the Northeast reserve, which was established by former President Barack Obama, saying any such stockpile should have been created by Congress. A 2022 report by the Government Accountability Office said the gasoline reserve, which has never been tapped, would provide minimal relief during a severe shortage. The reserve costs about $19 million a year to maintain.

Patrick De Haan, an analyst for GasBuddy, said sale of the Northeast reserve would have little impact on gasoline prices nationally, although there “may be a slight downward pressure on prices” in the Northeast. The million-barrel reserve only amounts to about 2.7 hours of total U.S. gasoline consumption, he said.

“As an analyst, this reserve never really made a whole lot of sense to have,’' De Haan said in an Associated Press interview. The reserve is very small and must be frequently rotated, “because gasoline has a shelf life,’' De Haan said. “That’s why there’s really no nation that has an emergency stockpile of gasoline’’ other than the U.S.

The Strategic Petroleum Reserve has vastly more quantities of oil needed in an emergency, he said.

AP Radio reporter Shelley Adler in Fairfax, Virginia, contributed to this story.