FIPI organises Webinar on COVID-19 Crisis Management – Challenges in Oil Marketing


FIPI organises Webinar on COVID-19 Crisis Management – Challenges in Oil Marketing

Over the long history of oil, the market has endured multiple shocks, but none comes closer in ferocity and severity to what it is facing today. The market has been hit by a double whammy of falling prices and shrinking demand. The increasing number of COVID’19 cases and the sweeping lockdowns and travel bans across all major demand centres, resulted in an unprecedented shrinkage in demand of crude oil and products.

In India, the nationwide lockdown that came into effect on 24 March, 2020 brought the entire economy to a standstill. As result of massive fall in fuel demand, oil marketing companies (OMCs) are facing the challenge of drying revenue streams and acute liquidity constraints. The fact that Indian OMCs maintained uninterrupted supply in spite of the threat of the pandemic and nationwide lockdown, stands testament to the sector’s commitment to the larger objective of national welfare.

With this background, the Federation of Indian Petroleum Industry (FIPI) joined hands with I-ten Media to organize the webinar on ‘COVID-19 Crisis Management – Challenges in Oil Marketing’. The objective of the webinar was to provide the India’s Oil Marketing Companies (OMCs) with a unique platform to share their experiences of circumventing barriers to ensure uninterrupted supply; to highlight bottlenecks and future challenges; and to cull out areas, where Government support will be imperative for OMCs to successfully tide over the COVID inflicted crisis. The esteemed panel for the webinar comprised of Mr Sunil Mathur, Executive Director (LPG), IndianOil; Mr P S Ravi, Executive Director – Retail, BPCL; Mr Madhur Taneja, CEO – Oil Retail, Nayara Energy and Mr Raj Bhan, Senior Vice President, RIL. The discussion was moderated by Mr Anish De, National Head – Energy & natural Resources, KPMG.

The opening address at the webinar was delivered by Dr R K Malhotra, Director General, FIPI. Mr Malhotra pointed out that lockdowns due to COVID-19 have created havoc for the global economy and India is no different. Some recent estimates by agencies indicate zero to negative growth in 2020 as well but majority find it within positive scale. He highlighted that liquidity has emerged as a major issue for Indian Oil Marketing Companies (OMCs) as they continued to incur expenses during the lockdown while the revenue witnessed a sharp fall. He further reiterated that the Federation of Indian Petroleum Industry (FIPI) stands firmly by the ailing Indian industry at this time of crisis and assured that FIPI has been working closely with the Government to create a supportive policy ecosystem for the industry to grow.

During the panel discussion, it was pointed out that the overall consumption of liquid fuels fell by as much as 60 per cent in April. Industry has witnessed a demand destruction of over 12-14 KL per day due to the COVID induced lockdown. The objective of the OMCs during this period was to ensure business continuity while ensuring safety across the entire value chain. However, a recovery in the sale of liquid fuel was recorded in both urban and rural markets in the month of May. Panellists highlighted that during the lockdown an increase in nationwide consumption LPG was recorded. Against an annual growth of 6.6 per cent in FY’20, LPG consumption grew by over 12 per cent in the month of April, 2020 alone.

There was a consensus among the panellists that the liquidity and cash flow situation has emerged as a major challenge for all Indian OMCs. To deal with the increasingly difficult cash flow situation, many Indian OMCs adopted the cash and carry approach. OMCs have also encouraged franchisee partners, whose profitability has also been impacted due to reduced sales, to ensure that the cash flows remain intact for them. Panellists agreed that during these challenging times, it is of utmost importance to ensure that the entire set of resources at all levels are safe and available for business activities. Companies are coming up with Standard Operating Procedures (SOPs) to ensure safety of employees and customers at all points. Many marketing companies are making use of this time to train and reskill their employees to better tackle the future challenges and operate in a changing business environment. Many OMCs are also focussing on process improvement and investing in cutting edge digital technologies.

The webinar received an overwhelming response and was attended live by over 300 participants. The webinar was attended by a wide spectrum of participants ranging from Ministry, regulators, OMCs to media. The panel discussion proved extremely engaging and witnessed some very insightful replies to the questions raised by the participants.

Webinar Summary