Petrol pump dealers in Telangana not to lift stocks on May 31

‘No Purchase’ protest in support of higher commission, voicing concern at losses when Excise duty is cut

Rush at a petrol pump. Representational purpose

Petroleum dealers across Telangana will not purchase petrol and diesel, from the national oil marketing companies they represent, on May 31 in support of demand for higher commission and a mechanism that safeguards them whenever Excise duty on fuel is reduced.

Customers, however, will not be impacted as dealers will cater to them with existing stocks, Telangana Petroleum Dealers Association (TPDA) president M. Amarender Reddy said.

There are around 3,500 petroleum dealers, of the three OMCs namely Indian Oil Corporation, BPCL and HPCL, in the State and they purchase around 90 lakh litres of fuel daily. The ‘No Purchase’ will be the first among many protests petroleum dealers in many States plan to draw attention to their demands.

According to Mr. Reddy, dealers in 15 States, including neighbouring Andhra Pradesh as well as Tamil Nadu, Kerala, Maharashtra, Rajasthan and Delhi, have decided to resort to a ‘No Purchase’ protest on May 31.

The protest comes in the backdrop of the Centre slashing Excise duty on petrol and diesel by ₹8 and ₹6 per litre respectively on May 21, something that led to the dealers selling stock on hand at the reduced prices. Compounding their woes was the government reducing the rate of levy on a Saturday — dealers usually get more than the usual quantity of stocks as oil depots are closed on Sundays.

A leader of a national petroleum dealers’ body pegged the losses due to recent excise duty revision — the previous reduction was in early November — at ₹2,000 crore. Mr. Reddy estimated every dealer to have lost ₹5-50 lakh in the recent revision.

Petroleum dealers contend that the benefit, whenever, fuel prices are increased, is no match to the loss they incur when the levy is slashed. The increase, in small doses, are only enough to take care of the working capital.

Conveying the decision to not lift stocks to the State Level Coordinator, the Association said the dealers commission has not been enhanced since 2017 in spite of fuel prices more than doubling thus resulting in higher working capital requirements.

On the impact of the Excise duty revision, the Association said: “oil marketing corporations do not incur loss due to such reductions. We are confident the government can ensure well-being of the dealers too via a special provision wherein dealers should not gain or lose money due to the Excise rates.”

The No-Purchase move also comes on the heels of petroleum dealers across the country recently highlighting how the oil companies want them to restrict fuel supplies, something leading to stock out at petrol pumps or the outlets shutting earlier than usual, including in Hyderabad. While TPDA letter to the SLC is silent on this aspect, Mr. Reddy said the situation with regard to supplies to the dealers is gradually improving.