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Bulk diesel sales tumble as buses turn to retail outlets

N. Ravi Kumar
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Government buses are fuelling the trend.—Photo: M. Karunakaran
Government buses are fuelling the trend.—Photo: M. Karunakaran

The inevitable is happening. Consumers of expensive bulk diesel are shifting to retail outlets. Consequent to the decision to free bulk diesel prices, sales have begun to fall even as retail sale through pumps is beginning to rise. Sales data of the state-owned oil marketing companies for the period January 18 to February 5 show that there has been a 25 per cent swing from bulk to retail sales, and what’s more, private retailers such as Reliance, Essar and Shell are quickly moving in to capture the retail business.

The government, on January 17, allowed the oil companies to price bulk diesel sales at market price while maintaining a subsidy on retail sales. Thus, the bulk fuel prices are now about Rs.10 a litre more than retail price.

Bulk sales comprise supplies to private buses, transport corporations, power utilities, industrial units, railways and defence establishments. Of these, buses are the only ones that could move over to retail outlets. This is indeed happening. Consequently, diesel sales to bulk consumers have dropped by 25-30 per cent countrywide since January 18 when prices were freed. This is in comparison to sales in the January 1-17 period.Close to 40 per cent of the drop in bulk sales has gone to private retailers, sources in the national oil companies said. The private players, they said, were offering discounts and credit to the bulk consumers.

Retail sales of diesel by the three nationalised oil marketing companies have risen by 10-12 per cent in the same period. One major reason for this is the move by State transport corporations to fuel up at retail outlets where the price is lower. “Out of 12 million tonne per annum bulk diesel consumption, private buses and State transport corporations account for 5 million tonnes. This is the volume with the potential to shift to retail outlets,” the official said. This trend is seen particularly in States with a strong network of public transport corporations. Some State transport corporations like those in Tamil Nadu have stopped placing indents for bulk diesel supplies. “It has been nearly a week since the State transport corporations took bulk supplies,” a senior official of IOC said.

Andhra Pradesh, Rajasthan, Gujarat, Punjab and Karnataka are the other States where the trend is growing.


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