Dealers say oil firms want them to curtail diesel, petrol sales

Retailers call on OMCs not to ration supplies; refiners say some dealers facing credit issues

Following reports of the impending fuel scarcity, people queued up at petrol bunks to refill the tanks of their vehicles, in Vijayawada on Saturday. | Photo Credit: G.N. Rao

Petroleum dealers have written to the government flagging concerns over the increased pressure they are facing from state-owned oil marketing companies (OMCs) to restrict the sale of diesel at their outlets as more bulk consumers seek to take advantage of the relatively lower price at which the fuel is sold to retail buyers.

“We have been advised to restrain sale to new customers and cater to only our existing customers,” Consortium of Indian Petroleum Dealers (CIPD) wrote to the oil industry coordinator in a letter, the contents of which were shared with The Hindu.  “Fear of short supplies will cause panic,” CIPD President M. Narayana Prasad and General Secretary K. Suresh Kumar wrote, appealing to the companies not to ration fuel supplies.

At the heart of the ‘diktat’ the CIPD has highlighted is a differential price - higher by as much as ₹25 per litre – that is charged to bulk diesel consumers such as transport corporations, private bus fleet operators, industries and operators of generator sets.

Another reason for oil companies asking dealers to keep a watch is the revenue loss on account of petrol and diesel prices not getting adjusted always in tandem with that of crude oil. Though petrol and diesel have been deregulated, giving OMCs the freedom to fix prices, in reality it is done in coordination with the government.

A recent decision by two OMCs to stop offering products to dealers on credit has also impacted supplies to consumers. The shift away from the practice of allowing dealers to pay later has led to ‘stock out’ situations at fuel outlets in several places, sources in the trade and senior officials of the two OMCs confirmed.

A senior official of HPCL, speaking on the condition of anonymity, explained that the ‘stock out’ had been caused because some dealers had been unable to clear their dues and place indents under a new system that requires them to pay for the supplies received by the end of the day.

A senior official of Indian Oil Corporation, who also preferred not be named, said IOC was supplying products as per the demand. “We have not put restrictions on any supply,” he asserted, admitting that the same may not be true across the oil industry, especially since product prices had been on hold for long posing challenges to the OMCs.