Fuel Retail Prices Remain Stable; But Rs 25 per Liter Diesel Increase For Bulk Consumers

The price of diesel for bulk consumers was increased by Rs 25 per liter; the retailer stared at the closure

Fuel prices remained unchanged across metro cities for the longest period as rates remained static since the daily price review began in June 2017. However, diesel prices have risen for bulk consumers by Rs 25 per liter, widening losses for retailers.

The center has cut excise duties on November 4, 2021, to provide relief from prices that have reached all -time highs. The government has reduced the petrol tax by ₹ 5 per liter and diesel by ₹ 10 per liter, leading to a significant drop in fuel prices.

Then in December 2021, the Delhi government reduced the value added tax (VAT) on petrol from 30 per cent to 19.40 per cent. With this, the price of petrol in the capital has been lowered by ₹ 8.56 per liter.

But the price of diesel sold to bulk consumers has been raised by about Rs 25 per liter in line with the nearly 40 per cent increase in international oil prices, but retail rates at petrol pumps remain unchanged, a source told PTI.

Gasoline pump sales jumped by a fifth this month after bulk consumers such as bus fleet operators and shopping malls lined up on petrol floors to buy fuel instead of the usual practice of ordering directly from oil companies, increasing retailer losses.

The worst affected were private retailers such as Nayara Energy, Jio-bp and Shell, which refused to reduce any volume despite an increase in sales. But now, shutting down the pump is a more viable solution than continuing to sell more fuel at a rate that has been frozen for a record 136 days, three sources with direct knowledge of the development told PTI.

In 2008, Reliance Industries shut down all 1,432 of its petrol pumps in the country after sales declined to almost zero as it could not match the subsidy prices offered by public sector competition.

The same scenario is likely to happen again as retailer losses widen from bulk consumers switching to gasoline pumps.

The price of diesel sold to bulk consumers has been raised to Rs 122.05 per liter in Mumbai. This is compared to Rs 94.14, the price per liter of the same fuel sold at petrol pumps.

In Delhi, diesel costs Rs 86.67 a liter at a petrol pump, but for bulk or industrial consumers, it costs about Rs 115.

Despite the spike in global oil and fuel prices, oil company PSU has not raised the retail price of petrol and diesel since November 4, 2021, a move seen to help the Bharatiya Janata Party (BJP) in a crucial state election.

Prices were supposed to be in line with costs after counting the votes on March 10, but the start of the second half of the next Budget Session meant the price increase didn’t happen.

Private fuel retailers like Nayara Energy, Jio-bp and Shell have to hold back petrol and diesel prices as they will lose customers if rates at their petrol pumps are higher than Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL).

But now, PSU retailers have raised rates for bulk consumers such as state bus fleets and shopping malls and airports that use diesel to generate backup electricity.

There are almost no bulk or industrial petrol users; diesel is widely used in industry.

The huge difference of about Rs 25 per liter between the bulk consumer rate and the petrol pump price has prompted bulk consumers to refuel at petrol pumps instead of ordering tankers directly from oil companies.

This has led to huge losses for oil companies, which have already suffered losses from the sale of petrol and diesel at prices far below cost.

While Nayara Energy did not respond to emails sent for comment, Jio-bp-a fuel retail joint venture of Reliance and bp UK-said, “there has been a huge surge in demand at petrol stations (grocery stores) due to a delta increase of Rs 25 per cent between retail and industrial diesel prices, leading to the heavy transfer of bulk diesel (direct customers) to retail stores. ” “There has also been a substantial addition of fuel by B2B & B2C merchants and customers, who have prioritized their purchases, to replenish their tanks and capacity in anticipation of a proper price increase. Due to this immediate surge, there were sales recorded in March 2022, which gave pressure on the overall logistics and supply infrastructure, ”a spokesman for Jio-bp said.

The spokesperson added that this was exacerbated by the shortage of Tank Trucks and rakes following the sudden surge in demand as well as the limited availability of TT crews during the festive period across the industry.

While private retailers did not disclose sales, PSU retailers sold 3.53 million tonnes of diesel from March 1 to 15, up 32.8 percent from a month earlier. Sales were 23.7 percent higher year-over-year and 17.3 percent higher than sales on March 1-15, 2019.

Last week, Oil Minister Hardeep Singh Puri said that fuel sales had jumped 20 per cent due to hoarding in anticipation of price hikes, but sources insisted sales were also on the rise as bulk consumers lined up at petrol pumps.

A Jio-bp spokesperson said despite the challenges, Reliance is fully committed to meeting the demands of its retail customers.

While Nayara has 6,510 petrol pumps in the country, Jio-bp has 1,454. PSU controls 90 percent of the 81,699 petrol pumps in the country.

In 2008, PSU retailers were paid government subsidies for selling petrol and diesel at below cost, but private retailers were excluded from such schemes. This time, PSU retailers have been asked to sum up their losses from inventory gains and the higher refining margins they currently earn. But private retailers do not have refineries to cover retail losses.


Welcome to India's Largest news platform, I assure you that we daily update on Global news which helps you to grow your knowledge.

Related Articles

Leave a Reply

Your email address will not be published.

Back to top button