Diesel price for bulk users hiked Rs 25/ltr; pvt retailers stare closure
New Delhi, March 20 (PTI): The price of diesel sold to bulk users has been hiked by about Rs 25 per litre in line with a near 40 per cent rise in international oil prices, but retail rates at petrol pumps remain unchanged, sources said.
Petrol pump sales have jumped by a fifth this month after bulk users like bus fleet operators and malls queued up at petrol bunks to buy fuel rather than the usual practice of ordering directly from oil companies, widening the losses of retailers.
Worst hit are private retailers like Nayara Energy, Jio-bp and Shell, who have so far refused to curtail any volume despite a surge in sales. But now closure of pumps is a more viable solution than continuing to sell more fuel at rates that have been on freeze for a record 136 days, three sources with direct knowledge of the development said.
In 2008, Reliance Industries had shut all of its 1,432 petrol pumps in the country after sales dropped to almost nil as it could not match the subsidized price offered by the public sector competition.
A similar scenario may unfold again as retailers’ losses widen from bulk users being diverted to petrol pumps, they said.
Price of diesel sold to bulk users has been hiked to Rs 122.05 per litre in Mumbai. This compares to Rs 94.14 a litre price of the same fuel sold at petrol pumps.
In Delhi, diesel costs Rs 86.67 a litre at the petrol pump, but for bulk or industrial users it is priced at about Rs 115.
PSU oil companies have not raised retail prices of petrol and diesel since November 4, 2021 despite a surge in global oil and fuel prices, a move seen as aiding the Bharatiya Janata Party (BJP) in crucial state assembly elections.
Prices were supposed to start aligning with cost after counting of votes on March 10, but the ensuing start of the second half of the Budget Session meant that the price increases didn’t happen.
Private fuel retailers like Nayara Energy, Jio-bp and Shell were forced to hold petrol and diesel prices as they would have lost customers, if rates at their petrol pumps were higher than those of Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL).
But now, the PSU retailers have hiked rates for bulk users such as state bus fleets and malls and airports which use diesel for generating back up electricity, sources said.
There is hardly any bulk or industrial user of petrol, diesel is widely used in industries.
The wide difference of about Rs 25 per litre between the bulk user rate and petrol pump price has prompted bulk users to refuel at petrol pumps rather than book tankers directly from oil companies, they said.
This has led to widening losses of oil companies, who were already bleeding from selling petrol and diesel at way below the cost.
While Nayara Energy did not reply to an email sent for comments, Jio-bp — the fuel retail joint venture of Reliance and UK’s bp — said ”there is a massive surge of demand at fuel stations (retail outlets) due to increased delta of Rs 25 per cent between retail and industrial price of diesel, leading to heavy diversion of bulk diesel (direct customers) to retail outlets.” ”There is also a very heavy lifting of fuel by dealers and both B2B & B2C customers, who have advanced their purchases, to top up their tanks and capacities in anticipation of price increase which is overdue. Due to this immediate surge there have been record sales in March 2022, which is putting strain on the entire logistics and supply infrastructure,” Jio-bp spokesperson said.
This is further exacerbated by shortage of Tank Trucks and rakes due to sudden surge in demand along with limited availability of TT crew during the festive period across the industry, the spokesperson added.
While private retailers have not disclosed sales, PSU retailers have sold 3.53 million tonnes of diesel from March 1 to 15, up 32.8 per cent from a month earlier. The sales were 23.7 per cent higher year-on-year and 17.3 per cent higher than sales in March 1-15, 2019.
Oil Minister Hardeep Singh Puri last week said that fuel sales had jumped 20 per cent due to hoarding in anticipation of price increase, but sources insisted the sales also increased because of bulk users queuing at petrol pumps.
A Jio-bp spokesperson said in spite of challenges, Reliance is fully committed to meet the demand of its retail customers.
While Nayara has 6,510 petrol pumps in the country, Jio-bp has 1,454. PSUs control 90 per cent 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 kept out of such a scheme. This time around, PSU retailers have been asked to square up their losses from inventory gains and higher refining margins they are earning now. But private retailers do not have refineries to cover up for retail losses.
Disclaimer :- This story has not been edited by The Sen Times staff and is auto-generated from news agency feeds. Source: PTI