"The threat is real, and the oil PSUs are aware of it. However, all three have got their act together and are going all out to ensure that their interests are protected," sources in the petroleum ministry said.

The retail points being wooed by private players are "B" sites which are owned by the dealers and constitute at least 50 per cent of the outlets of IOC, HPCL and BPCL. In fact, this is particularly high in the case of IOC and estimates indicate that the corporation's percentage of "B" sites is close to 65. "A" sites are those which are owned or leased by the oilcompany and take up a lion's share in the metros. Though exact numbers are not available, experts reckon that at least two-thirds of all retail outlets in the metros are company-owned or leased. The situation is reverse in towns and highway outlets which are generally owned or leased by a dealer and fall under the "B" site category. It is here that the threat of takeover by the private sector assumes significance.The three refining companies account for nearly 16,000 retail sites of which HPCL and BPCL's share is around 4,500 each with the balance 7,000 taken up by IOC. Of these, approximately 50 per cent, or 8,000, are "B" sites. The other 1,500-and-odd retail outlets are those of IBP, the stand-alone marketing company.The big three have, as part of their strategy to protect their outlets, begun giving a facelift to their own "A" sites.

Attractive additions like a shopping centre, more greenery and polite, well-dressed attendants are part of the sprucing up exercise. Consequent to this, business at theseoutlets has boomed with more and more customers making a beeline for them.

The oil PSUs have also been quick to renew their lease agreements for "A" sites by offering more money, keeping in mind increased rental rates. The other option being exercised is to even buy out these sites from their owners/lessors.

As regards "B" sites, the three refining majors have already kicked off the process of buying some out from dealers. They are also believed to have expressed their willingness to lease sites from dealers with an idea of upgrading them to the levels of their own "A" sites. This way, the dealer lessor is assured of better business prospects in these outlets, sources added.

So, while the oil companies have worked out their strategy, the question remains - will the dealers bite the bait? Some could be swayed by the lure of lucre from rich private players but would be as worried about the long term prospects of being associated with them. After all, decades of working with established names like BPCL,HPCL and IOC has taught dealers that these are strong, reliable companies which would not pack up and quit business.

Hence, most of them would be loathe to shift loyalties to a new partner. "To them, it would be breaking a habit and this would not be the easiest of decisions to make," experts say. However, where the oil PSUs may be hard pressed is to match an offer made by a multinational like, say Shell or Aramco, or in the case of an Indian player, somebody like Reliance Petroleum. Even if they could, it is feared that the archaic government rules would prevent the oil PSUs from doing much to safeguard their interests.

The other important point to be considered, sources say, is that it will be a good two to three years before the private sector gets a strong foothold in the Indian oil sector. Whether they will view this as a long term area of interest will depend on conditions prevailing at that time, sources add.

IOC had, in a recent internal circular, cautioned that its retail network could be anattractive takeover target for the private sector consequent to deregulation of the petroleum sector.

"The private sector can attack retail network, particularly "B" sites, and buy them out thus affecting our business directly," the note said.