Diesel price for bulk users hiked ₹25/litre; private retailers stare closure

Sources said the price of diesel sold to bulk users has been hiked by around Rs 25 per liter in line with a nearly 40% increase in international oil prices, but the retail rates at petrol pumps remain unchanged.

Petrol pump sales jumped a fifth this month as bulk users such as bus fleet operators and malls queued up at petrol bunks to buy fuel instead of the usual practice of placing orders directly from oil companies, adding to the losses for retailers. .

Private retailers such as Naira Energy, Geo-BP and Shell have been hit the hardest, which have so far refused to cut any volumes despite a jump in sales. But shutting down the pumps now is a more viable solution, continuing to sell more fuel at steady rates for a record 136 days, said three sources with direct knowledge of the development.

In 2008, Reliance Industries closed all its 1,432 petrol pumps in the country after sales had dropped to almost zero as it could not match the subsidized price offered by the public sector competition.

He said a similar scenario may resurface as the diversion of bulk users to petrol pumps increases the losses for the retailers.

The price of diesel sold to bulk users has been reduced to Rs 122.05 per liter in Mumbai. This compares to Rs 94.14 for the same fuel sold at petrol pumps.

In Delhi, diesel costs Rs 86.67 per liter at petrol pumps, but it costs around Rs 115 for bulk or industrial users.

Despite the rise in global oil and fuel prices, PSU oil companies have not increased the retail prices of petrol and diesel with effect from November 4, 2021, a move seen as an aid to the Bharatiya Janata Party (BJP) in the crucial state assembly elections. being seen in

Prices were supposed to start aligning with costs after the counting of votes on 10 March, but the start of the second half of the budget session meant that prices did not rise.

Private fuel retailers like Naira Energy, Geo-BP and Shell were forced to keep the prices of petrol and diesel as if the rates at their petrol pumps were comparable to those of Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (IOC). If I were more, they would have lost customers. BPCL) and Hindustan Petroleum Corporation Limited (HPCL).

But now, PSU retailers have hiked rates for state bus fleets and bulk users like malls and airports, which use diesel to generate electricity, said sources.

With hardly any bulk or industrial users of petrol, diesel is widely used in industries.

He said the wide gap of around Rs 25 per liter between the wholesale user rate and the petrol pump price has prompted the bulk users to refuel at petrol pumps instead of book tankers directly from oil companies.

This is increasing the losses of the oil companies, which were already bleeding by selling petrol and diesel at below cost.

While Naira Energy did not respond to emails sent for comments, Jio-bp-Reliance’s fuel retail joint venture and UK’s BP Retail and Industrial Price of Diesel, thereby heavily turning wholesale diesel (direct customers) into retail outlets Gone. “There has been a lot of heavy lifting of the fuel by dealers and both B2B and B2C customers, who have upgraded their purchases, to increase their tanks and capacity in anticipation of a price hike that is overdue. This immediate surge has led to record sales in March 2022, putting pressure on the entire logistics and supply infrastructure,” said a Jio-bp spokesperson.

This is further compounded by the limited availability of TT crew during the festive period across the industry as well as shortage of tank trucks and rakes due to sudden surge in demand, the spokesperson said.

While private retailers have not disclosed sales, PSU retailers have sold 3.53 million tonnes of diesel from March 1 to March 15, up 32.8% compared to a month ago. Sales were up 23.7% year-on-year and 17.3 percent higher than sales in March 1-15, 2019.

Oil minister Hardeep Singh Puri said last week that fuel sales have increased by 20% due to hoarding on anticipation of a price hike, but sources say sales also increased due to the queue of bulk users at petrol pumps. happened.

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

While Naira has 6,510 petrol pumps in the country, Jio-bp has 1,454. PSUs control 90% of the country’s 81,699 petrol pumps.

In 2008, government subsidies were paid to PSU retailers to sell petrol and diesel at lower prices, but private retailers were excluded from such a scheme. This time, the PSU retailers have been asked to meet their losses from inventory gains and higher refining margins which they are earning now. But private retailers do not have refineries to cover the retail losses.

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