Economy

Petrol pump operators say OMCs rationing diesel supply, stop credits

Rishi Ranjan Kala | | Updated on: May 17, 2022

Private OMCs are in a worse position due to no revision in prices of auto fuels and are forced to raise prices

Oil marketing companies (OMCs) are resorting to emergency measures such as stopping credits to petrol pump owners and rationing auto fuels, particularly diesel, as the under-recoveries on petrol have averaged at ₹8-10 a litre, while that on diesel is in the range of ₹25 per litre.

Sources said that OMCs are unable to pass on the increase in crude oil prices to the end consumer. Besides, there is no window available for fuel price revision, at least for the current fortnight, due to record high inflation in both wholesale price index (WPI) and consumer price index (CPI).

The situation is forcing OMCs to curtail supplies, especially of high speed diesel (HSD), to check under recoveries. OMCs used to provide supplies on credit for last three days of a month and the payment could be made by the pump owner during the first week of the next month. This practice has been stopped for March, April and May this year.

“Earlier credit was given at the end of the month. It happened till February, but now most are not giving it. It has an impact on small and medium pump operators in small towns and villages. For instance, during the recent weekend and Monday due to holidays, several small pump owners could not make payments, and so could not get supplies. Also rationing is happening. Metros and large cities are largely comfortable in terms of supplies though,” a senior official from a leading OMC explained.

Emergency measures

Hemant Sirohi, a member of the Empowering Petroleum Dealers Foundation (EPDF), said that supplies are at a comfortable level at large outlets and metros.

“Small towns and villages are facing supply issues at present. The situation is different from State to State. Also credit to small operators is not being given, which again increases their problems,” Sirohi, who runs a pump for state-owned Bharat Petroleum Corporation (BPCL) in Meerut, added.

Chhattisgarh State President of HPCL Petrol Pump Dealers’ Association Vijay Pandey said: “Rationing is happening at some places in the state. The situation was serious during February this year. We had raised the issue with HPCL and had reached a solution. High under recoveries is forcing OMCs to curtail supplies to check loss,” he added.

Vikram Singh Bais, a petrol pump owner in Pandaria town of Chhattisgarh, said that his supplies are depleting. “Earlier we used to get fuel on credit, but not now. Supplies are also curtailed. Now getting Diesel supply is a major problem as the under recovery here is high and OMCs do not want it to rise further,” he added.

Private OMCs in worse situation

With no fuel price revision in sight, the private OMCs are taking a huge hit, which is forcing some to raise prices. For instance, a source said that Shell OMC will be raising the price of diesel by around ₹7 a litre.

“The impact of the news is that PSU OMCs are going in for rationing in Bengaluru, where Shell has many outlets. This is being done as consumers will flock to PSU supplied pumps, like it happened when the government raised price of diesel for industry by ₹25 per litre,” the source said,

When contacted, a company spokesperson said, “Shell India confirms the price increase in diesel. We understand the concerns of our customers. However, due to the current volatile and unsustainable market conditions, we have decided to increase the diesel prices temporarily. This enables us to serve our customers continuously.”

Similarly, sources said that Reliance Industries and BP, which operate more than 1,400 fuel retail outlets, had almost halved their supply in the past month, and there are indications that more cuts can follow.

A Reliance BP Mobility (RBML) spokesperson said, “As we navigate this unprecedented scenario of volatile fuel prices, Jio-BP remains committed to fulfilling the brand’s promise of bringing the future of mobility to Indian customers. Any speculation around Jio-BP shutting down operations are conjectures without any basis.”

Published on May 17, 2022
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