Whenever we visit to refill petrol, our thoughts start imagining that the petrol pump owner earns a lot of wealth. The harsh reality is even more different from your generic opinions. Do you know petrol pump owners earn just 3 to 4 rupees per litre ?
Most of the prices are decided by the governments and oil agencies. The oil dealers receive a fixed amount of margins from decades. There have been no similar changes in their overall productivity. These petrol pump owners are dealers between government and agencies. The petrol pump is measured in 1 kg equal to 1000 litres and most petrol pumps sell around 170 kgs to 190 kgs of petrol per month. It is around 1,70,000 litres, which would give you a profit of approximately 5.5 lakhs without removal of expenses and salaries. Margins of governments like GST, state tax and other uneven charges are involved. In this business, most of the wealth is used for extra charges rather than good margin for dealers. After earning that monthly amount, what about employees salaries, electricity bills, fuel evaporation, machine repairs and uneven expenses?
Based on the structure of petrol pumps, in rural areas it takes 30 to 40 lakh rupees to open a petrol pump. When it comes to urban and national highways, it takes around 50 lakhs to 3 crores. Only major places, like highways and busy streets which have the correct location with prime status and demand make good profits. The system of a petrol pump has 3 different types, where the owner owns the land but companies run, the owner and the companies tie up and share equal burden and the 3rd one is the owner taking entire control, from resources to execution and holding freedom to operate on his own terms.
We all think it is based on a system of business, but it is a contract with the oil companies for a franchise model with a lottery system. The petrol pump business has a smaller margin compared to many other businesses. The overall business you built takes atleast takes 5 years to 6 years to recover. Due to less margin and more expenses including the new regulation of UPI payments of 2000 would be charged more to the government. This UPI initiative is a major problem for petrol pump dealers. Many petrol pump owners are protesting the government's decision. Few are smartly making profits through opening car wash, air filling stations, cafes and food stalls near petrol pumps and gaining rental income. It is a tough business with high rules and regulation requires stringent management.
