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How to start an LPG Distribution business in India

How to start an LPG Distribution business; Recently, the government of India has modified the guidelines for the selection of LPG

By Ground Report
New Update
How to start an LPG Distribution business

Recently, the government of India has modified the guidelines for the selection of LPG distributors and the guidelines have been framed so as to include all types of LPC Distributorship of Public Sector Oil Marketing Companies (OMC). Starting an LPG distribution business in India involves a lot of logistical and legal aspects to consider. In connection to this, you could check out the LegalZoom reviews to understand how similar businesses have efficiently utilized their services for legal requirements.

Distributorship

There are 4 different types of Distributorships in India. The Sheheri Vitrak refers to the distributorships located in urban areas. The Rurban Vitrak includes the distribution of LPGs in Rural Urban areas or villages located within 15 kilometers from municipal limits. Gramin Vitrak refers to the distributorships in the rural areas while the Durgam Kshetriya Vitrak refers to the distributorships in difficult and special areas like Tribal lands, Islands, Hilly regions etc.

Eligibility Criteria for applying for LPG Distributorship

  • The applicant should be an Indian citizen as well as a resident of India.
  • Should have minimum qualification of metric pass. This criterion however is not applicable for freedom fighters.
  • The applicant must be within the age bracket of 21 to 60. This criterion again, isn’t applicable for freedom fighters.
  • The applicant be a family member of an employee of OMC
  • The applicant should be able to fulfil multiple norms from the Dealership/Distributorship.
  • The applicant shouldn’t be a signatory to distributorship/dealerships agreement, nor should he be terminated on account of proven cases of malpractices/adulteration.
  • The applicant should own a piece of land of minimum dimensions for the construction of the LPG godown or should own a ready LPG godown.

Basic facilities required for operation of LPG Distributorship

  1. Godown for storage of LPG Cylinders
  2. The LPG Distributor after selection would require a storage godown approved and licensed by Chief Controller of Explosives of Petroleum and Explosives Safety Organisation (PESO).
  3. In case of land ownership, the minimum dimensions of 25x30m2 for Rurban and Sheheri Vitrak, 21x26m2 for Gramin Vitrak and 15x16m2 for Gramin Vitrak if within the village.
  4. The land for godown should be plain and in one single plot free from overhead power or telephone lines.
  5. There should be no Nalas / Canals / Drainage pipes passing under the plot land.
  6. There should be an all-weather-approachable road of minimum width 2.5m leading to the godown for easy transportation of the LPG Cylinders.
  7. Showroom
  8. A showroom of minimum outer dimensions of 3x4.5m2 is to be made into a shop within the municipal/town/village limits.
  9. The showroom should be easily available to the public and have a suitable road to reach it.
  10. Infrastructure for home delivery of LPG Cylinders
  11. In addition to the godown and storage, delivery vehicles will be required for the distribution of the LPG Cylinders.
  12. Similarly an infrastructure to park these vehicles when not in use will also be required.

Application Process

  • Register on the LPG Vitrak Chayan Website
  • Go to the website: https://www.lpgvitarakchayan.in/
  • Click on the “Register” tab if you are a new applicant.
  • Provide a valid mobile number to generate OTP
  • Create your Profile on the website
  • Once the OTP is generated input all the other details on the application form
  • Input the OTP and submit the form.
  • You are now registered as an LPG Distributorship Applicant
  • You are ready to apply for the distributorship
  • Keep an eye out for advertisements
  • On the LPG Vitrak Chayan Website, there is a tab called “Important links”.
  • All the OMCs update their requirements from time-to-time.
  • The links to these is present in the “Important Links” tab.
  • Other than that, the advertisement for distributorship is also provided in 1 State newspaper and 2 District newspaper of where the location for distributorship is located.
  • Apply through the website
  • Individuals who fulfil the eligibility criteria for the LPG Distributorship can download the form free of cost from OMC websites.
  • For downloading the form however, you require a profile and hence it becomes necessary to have a profile beforehand. (How to start an LPG Distribution business)
  • This form downloaded is to be submitted blank on the website just for formality.
  • The applicant must arrive at the location along with the fee given against the advertisement for the given location.
  • For applying for more than one locations, the applicant must fill that many number of forms specifying the location of different locations in different forms and submit the forms by physically arriving at the location accompanied by the fee against the advertisement release.
  • In case more than one application is given by an applicant for one location, all the applications will be clubbed together and treated as one.
  • Pay the non-refundable fee
  • While submitting the application forms, the applicant must also pay the fee for registration.
  • The fee for different Vitraks is different and are given on the OMC websites.
  • This fee is non-refundable.
  • In case of more than one application for one location by a single applicant, the extra fee is forfeited.
  • Once you are selected the authorities will call you for Field Verification of Credentials
  • If you are selected, you are first called for an interview.
  • The authorities might also want to inspect the godown and office area before approving of your distributorship.
  • This inspection done, is called Field Verification of Credentials or FVC.
  • Submit the documents and 10% of the security deposit before FVC
  • Before the FVC actually happens the applicant must submit the important document mentioned in the brochure are to be submitted by the applicant along with 10% of the Security deposit.
  • On doing so the applicant is provided with the letter of Intent (LOI).
  • Pay the refundable security deposit
  • On receiving the LOI the applicant must pay the complete security deposit.
  • This deposit is interest free and refundable.
  • After this payment the OMC will be in contact with you and provide you and your staff with the required training.
  • When the OMC deems you perfect, you will be allowed to run your own distributorship.

Selection Process

  • The selection of a distributor is done by inviting the different applicants through advertisements done by three different newspapers – one that has the highest circulation in the state and two other having the highest distribution in the district where the location is.
  • Among these applicants the distributor is chosen by draw from all the eligible applicants for that location.

The tenure of the dealership is initially for 10 years and is renewable for 5 years after that. The 5 years however are renewed only after examining the performance of the distributor by the respective OMC and then decided.

For further guidelines, you can go to the official Bharat Petroleum website.

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