The price of diesel sold to wholesale users has been increased by about Rs 25 per liter in line with an almost 40% rise in international oil prices, but retail prices at petrol pumps remain unchanged, officials said. sources. Petrol pump sales jumped by a fifth this month after bulk users like bus fleet operators and shopping malls lined up outside petrol bunkers to buy fuel rather than practice habit of ordering directly from oil companies, increasing retailers’ losses.
Worst hit are private retailers like Nayara Energy, Jio-bp and Shell, which have so far refused to cut any volume despite an increase in sales. But now shutting pumps is a more viable option than continuing to sell more fuel at prices frozen for a record 136 days, three sources with direct knowledge of the development said. In 2008, Reliance Industries closed all of its 1,432 gas pumps nationwide after sales plummeted to near zero because they could not match the subsidized price offered by public sector competition.
A similar scenario could play out again as retailer losses widen as wholesale users are diverted to gas pumps, they said. The price of diesel sold to bulk users has been increased to Rs 122.05 per liter in Mumbai. This compares to the price of Rs 94.14 per liter of the same fuel sold at petrol pumps.
In Delhi, diesel costs Rs 86.67 per liter at the gas pump, but for bulk or industrial users, it is priced at around Rs 115. PSU oil companies have not raised retail prices gasoline and diesel since November 4, 2021, despite a spike in global oil and fuel prices, a move seen as helping the Bharatiya Janata Party (BJP) in crucial state assembly elections .
Prices were supposed to start matching costs after the votes were counted on March 10, but the start of the second half of the ensuing budget session meant that price increases did not happen. Private fuel retailers like Nayara Energy, Jio-bp and Shell have been forced to maintain petrol and diesel prices as they would have lost customers if their petrol pump prices were higher than those of Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL).
But now power pack retailers have raised rates for large users such as state bus fleets, shopping malls and airports that use diesel to generate emergency power, officials said. sources. There are hardly any bulk or industrial users of gasoline, diesel is widely used in industries.
The large difference of around Rs 25 per liter between the bulk usage rate and the price at the petrol pump has prompted bulk users to refuel at petrol pumps rather than booking tankers directly from the companies oil companies, they said. This led to increased losses for oil companies, which were already bleeding by selling gasoline and diesel well below cost.
While Nayara Energy did not respond to an email sent for comment, Jio-bp – the fuel retail joint venture of Reliance and UK’s bp said “there is a massive increase in demand at petrol stations (retail outlets) due to increase in delta of Rs 25% between retail price and industrial price of diesel resulting in large diversion of bulk diesel (direct customers) to the points of sale”. “There is also a very heavy lifting of fuel by dealers and B2B and B2C customers, who have advanced their purchases, to fill up tanks and capacities in anticipation of the price increase which is long overdue. Due to this immediate surge, there have been record sales in March 2022, which is straining the entire logistics and supply infrastructure,” Jio-bp’s spokesperson said. This situation is further exacerbated by the shortage of tankers and rakes due to a sudden increase in demand as well as limited availability of TT crew during the industry holiday season, added the spokesperson.
While private retailers did not disclose their sales, PSU retailers sold 3.53 million tonnes of diesel from March 1-15, up 32.8% from the previous month. Sales were up 23.7% year-on-year and 17.3% from sales from March 1 to 15, 2019. Oil Minister Hardeep Singh Puri said last week that fuel sales jumped 20 % due to hoarding in anticipation of higher prices, but sources insisted sales also increased due to bulk users queuing at gas pumps.
A Jio-bp spokesperson said that despite the challenges, Reliance is fully committed to meeting the demand of its retail customers. While Nayara has 6,510 gas pumps in the country, Jio-bp has 1,454. PSUs control 90% of the country’s 81,699 gas pumps.
In 2008, PSU retailers received government subsidies to sell gasoline and diesel below cost, but private retailers were kept out of such a program. This time around, PSU retailers have been asked to offset their losses due to inventory gains and the higher refining margins they are currently earning. But private retailers do not have refineries to cover retail losses.
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