Promotion of Rural

Entrepreneurship by Petroleum
Marketing Companies in India

VINAY KUMAR VERMA

Roll No : 34BM33 , PGDM-BM
MDI, Gurgaon

Date:0 13/09/2021
 Summary
Background
Energy demand of India is anticipated to grow faster than energy demand of all major
economies on the back of continuous robust economic growth. India’s energy demand is
expected to double to 1,516 Mtoe by 2035 from 753.7 Mtoe in 2017. So Petroleum industry
is required to increase investment in the coming years to meet this growing demand.
On the other hand, according to 2011 Census 68.84% people are living in rural areas of India.
People in rural areas suffer with unemployment, poor infrastructure facilities which may be
solved with the development of the rural entrepreneurs. In order to meet the growing demand
of the country in an organic and sustainable manner, Petroleum Marketing companies are
now trying to create opportunities in rural areas to harness the resources of biofuels which
will be a win-win situation for the country.
This report is trying to capture the various facets of communications that are playing
important role in promoting this entrepreneurship related activities by Petroleum Marketing
companies in Rural India.
Purpose
The purpose of this report is to identify the challenges and opportunities in rural areas related
to communication aspect which Petroleum Marketing companies have faced. The aim is to
realize the effective way of communication to convey the intent and later on measure the
impact in terms of the actual output of few Projects in Rural segment.
Method
In order to meet the purpose of the study, I have chosen secondary data of three Industry
leaders in Petroleum Retailing in the country (IOC/HPC/BPC). Detailed analysis has been
done to identify the major challenges and opportunities related to communication faced by
these companies.
Conclusion
In conclusion, the main opportunities and challenges were identified and how these
Petroleum Marketing companies have overcome these communication barriers is discussed in
this report. The data related to impact in terms of projects implementation that have been
made in rural areas is also detailed in the report.

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 Table of Contents
 Introduction.....................................................................................................................- 3 -
 Industry perspective..................................................................................................- 3 -
 Rural perspective.......................................................................................................- 4 -
 Combined perspective...............................................................................................- 4 -
 Companies and Projects in focus.....................................................................................- 5 -
 Communication process employed by Petroleum Marketing Companies......................- 6 -
 Basic Communication Model....................................................................................- 7 -
 Barriers in Rural Entrepreneurship promotion................................................................- 8 -
 Focus areas in Communication to overcome barriers.....................................................- 9 -
 Understand the Rural population...............................................................................- 9 -
 Select the right channels............................................................................................- 9 -
 Be Culturally Sensitive..............................................................................................- 9 -
 Communication of Socio economic benefits:...........................................................- 9 -
 Communication of environmental Benefits............................................................- 10 -
 Implementation of Effective Communication in Projects.............................................- 10 -
 Promotion of CBG (compressed Bio Gas Projects) in India...................................- 10 -
 Promotion of Bio-fuels (1G/2G & advance)...........................................................- 11 -
 Promotion of Kisan Sewa Kendras (Rural Retail Outlets)......................................- 13 -
 Conclusion.....................................................................................................................- 15 -
 References.....................................................................................................................- 16 -

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 Introduction
Industry perspective
Petroleum Industry in India is engaged in promoting rural entrepreneurships for a long time,
and this push is now accelerated to align with GOI mission of Make in India. Oil and gas
sector is among the eight core industries in India and this sector has huge growth potential as
India is expected to be one of the largest contributors to non-OECD petroleum consumption
growth globally. India’s oil refining capacity stood at 259.3 million metric tonnes (MMT),
making it the second-largest refiner in Asia. According to the data released by Department
for Promotion of Industry and Internal Trade Policy (DPIIT), the petroleum and natural gas
sector attracted FDI worth US$ 7.92 billion between April 2000 and March 2021(IBEF report
2021).
Some key highlights of increasing energy demand:
 According to IEA (India Energy Outlook 2021), primary energy demand is expected
to nearly double to 1,123 million tonnes of oil equivalent, as the country's gross
domestic product (GDP) is expected to increase to USD 8.6 trillion by 2040.
 India is the world’s third-largest energy consumer globally. Diesel demand in India is
expected to double to 163 MT by 2029-30.
 India’s consumption of petroleum products grew 4.5% to 213.69 MMT in FY20 from
213.22 MMT in FY19 and Crude oil consumption is expected to grow at a CAGR of
3.60% to 500 million tonnes by 2040 from 221.56 million tonnes in 2017
 Rapid expansion of Infrastructure projects in the country, revised FDI guidelines and
supportive policies in the country is giving push to Petroleum Industry.

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 Growth Drivers of Petroleum Industry

Rural perspective
On one side there is a growing energy demand in the country to make a prosperous India, on
the other side economic development of nation is hindered due to less opportunities in rural
areas. Majority of the Indian population lives in the villages and economic development of
our country largely depends on the progress of rural areas and the standard of living of rural
masses.
According to 2011 Census 68.84% people are living in rural areas of India. People in rural
areas suffer with unemployment, poor infrastructure facilities which may be solved with the
development of the rural entrepreneurs. Rural entrepreneurship is based on stimulating local
entrepreneurial talent and the subsequent growth of indigenous enterprises. Rural
entrepreneurs increase the standard of living and purchasing power of the people by offering
employment opportunity to the people in villages. Rural entrepreneurship can be considered
one of the solutions to reduce poverty, migration, economic disparity, unemployment and
develop rural areas and backward regions. But, these rural entrepreneurs are suffering with
various problems like fear of risk, lack of finance, illiteracy, and competition from the urban
entrepreneurs.

Combined perspective
In order to meet increasing energy demand and at the same time push economic development
of India, Petroleum Marketing companies are trying to create opportunities in rural areas by
promoting rural entrepreneurship through different projects. And the most important aspect to
achieve this objective is effective communication.
Effective communication = Better outcomes in Rural Entrepreneurship

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This report highlights more specific details like, what communication means in this
endeavour, the steps required for effective communication, the major obstacles in
communication, how to overcome obstacles through communication sharing, the importance
of communications in diverse work groups and at the end the impact it makes in the
outcomes.

Companies and Projects in focus

In order to study the communication process employed by Petroleum industries for Rural
entrepreneurship promotion, details of top three companies (as per Market share) were
collected. As per the details of 2020, following are three major players in retail segment:

1. Indian Oil Corporation

2. Hindustan Petroleum Corporation
3. Bharat Petroleum Corporation

Source: PPAC website (2020)

Also in order to study the communication activities done by these three companies, following
three segments were selected for analysis :
1. Compressed Bio Gas plants in Rural area
2. Investment in Bio-Fuels for rural development
3. Rural Retail Outlets

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 Communication process employed by Petroleum
Marketing Companies

In case of communication process of promotion of schemes related to rural entrepreneurships,

Oil Companies are the sender and while Public in rural areas are the receiver. This
communications process required a medium (many ways detailed later) to communicate the
content of a message. The medium may take just about any form, each unique in its ability to
influence the receptivity of the receiver. Petroleum Marketing companies creates a message
in terms of appropriate scheme to launch. The message can take many different forms,
usually in hard (Print Media )or soft format (Digital content). The hard format is usually
written on paper whereas soft format is electronic. Regardless of the format, a message is
necessary to initiate a communication and stimulate a relationship with the people in rural
areas.

Medium

Message

Sender Receiver (Rural Area)

Feedback

Basic Communication Model followed for Promotion of Schemes

Once message is created, a medium is required for communication of schemes. After

researching all the three top companies in the industries (IOCL/HPCL/BPCL) it has been

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identified that broadly following methods of communications are employed by all these
companies for promoting rural entrepreneurship :

1. Mass Communication using convention channels like print media and audio/video
channels : Petroleum companies employs radio channel for promotion of schemes,
make promotional videos with famous personalities, on emotional theme or feature
specific (for capturing audience attention utilizing Ethos, Pathos and Logos). Frequent
display of these schemes on different mediums helps to increase awareness among the
masses.
2. Using Social communication channels of Digital Communication and e-platforms:
In today’s era of digitization, Petroleum companies are also engaging entrepreneurs
on social media channels like Facebook, twitter, Instagram and YouTube, wherein
they can check latest schemes petroleum companies are targeting for rural areas.
3. Group communication in villages: Apart from mass communication channels,
Petroleum companies engage with local groups in villages through District
authorities, local Panchayats or Gram Sabha’s to make people aware about new
schemes which can benefit the rural entrepreneurs. This physical touch is through
time consuming and costly, but effective in the sense that feedback is available on the
spot and any doubts and queries of people are also resolved on the spot.

This communications process is not very smooth, as what the people receives may not be
necessarily what the message sent by Oil companies. A number of variables can affect the
quality of a message including the following: beliefs, values, the emotional impact of a
message, and the medium employed. These variables and others often referred to as “noise,”
can affect the degree of receptivity of a message and the feedback on the part of the sender or
receiver.

To resolve this noise issue in communication, Petroleum Marketing companies also creates a
feedback system while communicating the schemes with the audiences. Feedback may be
positive, negative, or neutral, indicating the receptivity of the audience. Following are some
commonly used feedback systems by Petroleum Industries:

1. Surveys after Promotion of schemes

2. Face to Face Feedbacks
3. Customer Apps

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 4. Websites
5. Indirect channels like Administration, Gram Panchayat etc.

Barriers in Rural Entrepreneurship promotion

Success of effective communication related to promotion of various schemes depends upon

certain factors or challenges which are faced by entrepreneurs. Majority of these
entrepreneurs are facing many problems due to non-availability of primary amenities in rural
areas especially in developing countries like India. The intent of petroleum Marketing
companies to create indigenous sources of alternate energy for reduction of crude imports and
also for economic development of our country largely depends on the development of rural
areas and also the standard of living in its rural mass. The entrepreneur face various problems
in day to day life and work. Some of the major problems faced by rural entrepreneurs are as
under:

1. Low Literacy Rate in Rural India – 71% in Rural and 86% in Urban (as per census
2011)
2. Non-availability of skilled labours
3. Lack of technical knowledge
4. Poor occupational safety and health services
5. Limited Financial Services for Funds
6. Lack of an established ecosystem in terms of pricing

Focus areas in Communication to overcome barriers

Understanding the challenges faced by rural entrepreneurs and preparing a communication

plan of schemes is of utmost importance. Petroleum Industry is one of the very old sector in
the country and they have understood the needs of rural population and so they try to create
their communication plan accordingly. While creating the communication plan following
aspects are taken care:

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 1. Understand the Rural population: Understanding the rural needs and availability of
raw materials for that particular scheme is important. Thus while allocating planning
for various projects like CBG and Biofuels- geographical area , availability of surplus
production and needs of that areas are also seen. For example, state of Uttar Pradesh
is high in cane farming so most of the Biofuels related projects are communicated
there while in other states like Rajasthan (wherein cane farming is not there), projects
related to 1G ethanol’s are not communicated to the rural entrepreneurs.
2. Select the right channels : Depending upon the literacy rate of the place and people
preference and affordability of communication mediums, Petroleum companies do
selection of right medium for communication. Since in rural places people do not read
newspaper much so most of the awareness is done widely through radio/television
mediums.
3. Be Culturally Sensitive: Based on cultural sensitivity advertisements are created for
different schemes to be communicated.
4. Communication of Socio economic
benefits: Petroleum companies specially
focus on socioeconomic benefits of the
various schemes that they want to
implement in rural areas. When people
are able to relate what’s in it for them,
their acceptance level is high. Once a
scheme is accepted and a project is
initiated later on it creates a chain reaction
solving many barriers that entrepreneurs
face and creates an effective ecosystem for futureEcosystem
schemes. created by effective Communication
5. Communication of environmental Benefits :
Apart from economic benefits, stress is also given to engage audience with
environmental benefits which can be obtained by these schemes. For example, these
projects related to CBG and Biofuels can help in avoiding crop burning, which creates
a lot of environmental pollution in the entire north India due to stubble burning by
farmers in various states. Farmers can take their stubble to these biofuels producers
and can also earn some revenue out of it. Not only that there can be reduction in
landfill emissions due to municipal and sewage waste. These can also be processed in
biogas plants for making alternate fuels.
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Implementation of Effective Communication in Projects
(Impact of Intent with effective Communication)

After understanding the broad nature of communication followed by petroleum marketing

companies, let us try to look at it from three different schemes/projects that these companies
are engaged in for promoting rural entrepreneurship.

Promotion of CBG (compressed Bio Gas Projects) in India

IndianOil (IOCL), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) (all Central
Public Sector Enterprises), invite online offers through Expression of Interest (EOI) from
Entrepreneurs, for supply of Compressed Bio Gas (CBG), from Plants processing biomass /
waste and providing the produced Compressed Bio Gas (CBG) to various Retail Outlets of
IOCL/ BPCL/ HPCL across the country. The purpose of inviting this EOI is to encourage the
entrepreneurs to set up Biomass/Waste to CBG Plants and further utilising the existing
potential of CBG in India. This initiative results into Better use of agricultural residue, cattle
dung and municipal solid waste.

These Petroleum companies along with MOPNG has evaluated an investment of Rs 1,75,000
crore for development of 5000 CBG plants by the end of year 2023. Availability of CBG
capacity from various sources as of year 2019-20 is as below.

Availability of Spare capacity (BCM/yr) for Production of CBG in India

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With effective communication techniques and proper awareness of rural masses and
entrepreneurs by Petroleum Marketing companies, many projects have already started in
various rural areas . These projects which are under-construction are going to bring following
impacts :

1. CBG plants will provide an additional revenue source to farmers and 75,000 direct job
opportunities and lakhs of indirect jobs
2. Tackling the problem of polluted urban air due to farm stubble-burning and carbon
emissions

Promotion of Bio-fuels (1G/2G & advance)

Government has emphasized on achieving energy security of the country with a target of
reducing import dependence i.e. usage of fossil fuels by 10% from 2014- 15 levels by the
year 2022. The growing concern about the import dependence for fuel requirement in tandem
with environmental pollution issues have driven the need for biofuels that have superior
environment benefits and are economically competitive with fossil fuel.
Since availability of raw materials is available in rural space, all the major Oil Marketing
Companies (IOCL/HPCL/BPCL) are engaged in promoting Biofuels related schemes to meet
the GOI target and at the same time for rural
development through entrepreneurship
opportunities.
First of all total requirement is assessed by
these companies, which is expected to touch
1100 Cr ltrs.

After analyzing the demand, segmentation

of available sources for production was done in order to prepare communication of different
schemes.

1. Surplus availability in Sugar

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 2. Surplus Grain availability
3. Surplus availability in Biomass including Sugar cane Top, grains, waste seeds etc

Total = 193.5

Sugar = 6 Biomass = 164.5

Grains = 23

Surplus Availability to Produce Ethanol (Fig in MMTPA)

After measuring the available scope

segmentation is done and accordingly
different schemes (related to 1G, 2G, advance
biofuels) through which Biofuels can be
produced is promoted. Already all three
companies are engaged in rural areas for
projects related to Biofuels as shown on Left
side. It is helping in bringing following
impacts:
• Provide remuneration to farmers,
subsidize crude imports and achieve forex
• Blending of ethanol in Petrol to address environmental concerns

Promotion of Kisan Sewa Kendras (Rural Retail Outlets)

There is strong demand for tractors and farm equipment’s in the country, which will require
easy access of Fuels in the rural parts of the country. Agriculture was the only segment which
remained positive even during COVID crises in year 2020, when the GDP of India dipped to

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 almost 24% in the first quarter. Through Market intelligence and various feedback
mechanisms developed over the times (result of continuous rural engagement programs),
Petroleum Marketing companies has sensed growing need of rural market and explored
opportunities to create more rural entrepreneurs to handle retail facilities and meet ever
growing demand of agriculture in the rural markets.
Following is the data collected from Industry (personal communication Sep 12,2021) related
to new Retail Outlets opened by each company in last four years:

IOC New Retail Outlets: Rural Vs Retail

Rura RO's Opened by OMC
Year l Regular %of Rural
2017-2018 501 452 111
2018-2019 335 313 107 1406
2019-2020 664 736 90
2020-2021 1406 1594 88
BPC New Retail Outlets: Rural Vs Retail 1000
Rura
Year l Total %of Rural
664 680
2017-2018 129 335 39
570
2018-2019 81 274 30 501
2019-2020 570 877 65 389
335
2020-2021 1000 1444 69
256 180
HPC New Retail Outlets: Rural Vs Retail 129
81
Rura IOC BPC HPC
Year l Total %of Rural
2017-2018 2018-2019
2017-2018 256 413 62 2019-2020 2020-2021
2018-2019 180 298 60
2019-2020 389 805 48 Key
2020-2021 680 1478 46
Highlights:
Indian Oil has opened maximum retail outlets in
rural areas in last 4 years.
As per the trend IOCL has been maximizing RO’s
in rural areas from early years while BPC and
HPC are now catching up.

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In order to interact with customers effectively, dedicated web portal has been created by
OMC’s.

Impact:
• Rural penetration increased from 24.8 % to 26.8 % in last one year.
• Agricultural sector is 2nd biggest consumer of diesel after transportation.

Conclusion

Petroleum Industry is trying to promote entrepreneurship in rural areas, through different

schemes like CBG, Biofuels and Rural RO’s . This venture is to resolve the dual purpose of
meeting some part of growing energy demand through indigenous resources and at the same
time creating opportunities in the rural areas for economic development of the nation.

Success of all these schemes depends upon effective communication of these to the receiver
through various mediums like radio, television, social channels , print media etc. Top three
Petroleum companies analyzed to make this report were Indian Oil Corporation, Hindustan
Petroleum, and Bharat Petroleum. The industry is engaging the audience through continuous
group and mass communication methods. Not only that, proper feedback mechanism is also
in place to address any barriers/noise generated in this communication process.
Communication and Feedback mechanisms of Petroleum Industry for rural entrepreneurship
promotion are changing with changing times. In today’s era, company is expanding digital
footprints and providing dedicated customer awareness portals as analyzed in the study.

In their attempt to promote entrepreneurship, Petroleum Industry is also facing some barriers
in effective communication and implementation of projects. But through schemes
segmentation and creating communication plans as per target audience, the industry is
managing and overcoming these barriers. Awareness about socio-economic and
environmental benefits, through the various schemes, is helping the industry to create a new
eco-system in rural areas. This new eco-system is also helping in breaking some barriers for
the development of new projects.

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At the end, we observed all activities through three different projects like promotion of CBG,
Biofuels and Rural retail outlets. Quantitative data is studied related to source availability,
means of accomplishments and their final impact in the society.

To conclude, in order to promote rural entrepreneurship, Petroleum Industry needs to focus

on communication strategies (existing and emerging) and successful implementation of these
to ensure intent is converted into required impact.

References

 IBEF report (July 2021), Indian Oil & Gas Industry Report. Retrieved Sep 10, 2021,
from https://www.ibef.org/industry/oil-gas-india.aspx
 National Policy on Biofuels (2018). Retrieved Sep 10, 2021, from
https://petroleum.nic.in/sites/default/files/biofuels.pdf
 Notice inviting expression of Interest under SATAT scheme (Oct 2018). Retrieved
Sep 10, 2021 from https://www.bharatpetroleum.com/pdf/EOICBGFINAL-46978-
4fd490.pdf
 Jayadatta S (Sep 2017), Major Challenges and Problems of Rural Entrepreneurship in
India 19(9),35. Retrieved Sep 10, 2021, from https://www.iosrjournals.org
 Bio energy details retrieved Sep 10,2021 from https://mnre.gov.in/bio-energy/current-
status
 NITI Aayog report (July,2021). Roadmap for Ethanol blending in India 2020-2025.
Retrieved Sep 10,2021, from https://prsindia.org/policy/report-summaries/report-of-
niti-aayog-on-roadmap-for-ethanol-blending-in-india-2020-25
 PPAC(2021). Oil & Gas Industry report. Retrieved Sep 10,2021, from
https://www.ppac.gov.in/
 Department for promotion of Industry and Internal trade (Apr, Mar 2021). Retrieved
Sep 10,2021, from https://dpiit.gov.in/
 Biofuels Technology information retrieved Sep 10,2021, https://praj.net/

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