Andhra Pradesh

Petrol bunks continue to face losses with the little demand for fuel in relaxation period

More competition is anticipated from bowser/mobile bunks

As many as 440 petrol bunks in the North Andhra region are incurring huge losses even after various relaxations from lockdown offered to the dealers.

Vehicular movement has significantly come down in spite of the graded relaxation of the nationwide lockdown, which is underway.

Fear of COVID-19, restrictions on inter-State movement, low frequency of economic activities, work from home options and the absence of leisure travel have adversly affected the petroleum outlets.

Maintenance cost is almost the same although the demand for petrol and diesel has fallen significantly. Dealers have to open the bunks round the clock and maintain a staff even when there are no customers.

As petrol bunks fall under essential services, oil marketing companies and government have insisted for their opening without any break. Due to this reason, the bunk owners have kept their outlets open from March 24 to June 7, a time when lockdown was being implemented strictly.

Vizianagaram Petroleum Dealers Association President Golugiri Nagireddy said that many bunks located in semi-urban and rural areas have been in severe financial crisis owing to the huge gap between the establishment’s income and expenditure.

Each medium range bunk has to sell at least 5000 litres of diesel and 2000 litres of petrol to get maintenance expenditure which includes staff wages and electricity bills.

Their sales have dropped almost 50% even after relaxations as many bunks in rural areas are hardly selling 1000 liters of diesel and 600 litres of petrol.

OMCs provide them around ₹2.56 profit margin on diesel and ₹3.38 on petrol per litre. The petrol per litre is sold at ₹75.80 and diesel is available at ₹69.58 in Srikakulam. The price of diesel is around ₹3 less compared to rates of Chattisgarh and Odisha as the Andhra Pradesh government is yet to receive the revised Value Added Tax.

The variation in the prices has not helped dealers with the restricted movement of vehicles between neighbouring States.

Sardar and Sirisha Petroleum Products Dealer Yarlagadda Venkanna Chowdary said that the dealers would be able to survive in future only with the change in their business module and with the effective utilisation of their premises.

“The petrol bunks have to utilise their space by extending financial, banking, insurance and RTA services to generate additional income,” he said. “In future more competition is anticipated from bowser/mobile petrol pumps which sell fuel in all places.

So, the dealers have to change their business module to survive in the competitive world,” he added. The All India Petroleum Dealers Association which anticipated further financial crisis has urged the Union government to come out with a bailout package for dealers.

It also opposed the direct bulk sale of fuel to factories by oil marketing companies. OMCs are offering up to ₹6 discount for bulk buyers, leading to loss of business for many outlets.

With the expansion of National Highway from Visakhapatnam to Itchapuram, many bunks lost business with the construction of several flyovers. “Lorry owners will not come to outlets located near bypass and service roads. It is leading to closure of many bunks in Visakhapatnam-Srikakulam route,” said a dealer of Ranasthalam

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Printable version | Jul 5, 2020 8:35:44 PM | https://www.thehindu.com/news/national/andhra-pradesh/petrol-bunks-continue-to-face-losses-with-the-little-demand-for-fuel-in-relaxation-period/article31786459.ece

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