INSUBCONTINENT EXCLUSIVE:
Diesel price for bulk users hiked Rs 25 a litre; retailers stare closureFuel prices have remained unchanged across metro cities for the most
prolonged duration when the rates have remained static since the daily revision of prices began in June 2017
Still, diesel prices have risen for bulk users by Rs 25 per litre, widening the losses for retailers.The Centre had cut excise duty on
November 4, 2021, to give relief from prices that had reached an all-time high level
The government had slashed the duty on petrol by ? 5 per litre and diesel by ? 10 a litre, leading to a substantial reduction in fuel
prices.Later in December 2021, the Delhi government had reduced the value-added tax (VAT) on petrol from 30 per cent to 19.40 per cent
With this, petrol prices in the national capital were slashed by ? 8.56 per litre.But the price of diesel sold to bulk users has been hiked
by about Rs 25 per litre in line with a near 40 per cent rise in international oil prices, but retail rates at petrol pumps remain
unchanged, sources told PTI.Petrol pump sales have jumped by a fifth this month after bulk users like bus fleet operators and malls queued
up at petrol bunks to buy fuel rather than the usual practice of ordering directly from oil companies, widening retailers' losses.The
worst-hit is private retailers like Nayara Energy, Jio-bp and Shell, who have refused to curtail any volume despite a surge in sales
But now, closure of pumps is a more viable solution than continuing to sell more fuel at rates that have been on freeze for a record 136
days, three sources with direct knowledge of the development told PTI.In 2008, Reliance Industries had shut all of its 1,432 petrol pumps in
the country after sales dropped to almost nil as it could not match the subsidized price offered by the public sector competition.A similar
scenario may unfold again as retailers' losses widen from bulk users diverting to petrol pumps.The price of diesel sold to bulk users has
been hiked to Rs 122.05 per litre in Mumbai
This compares to Rs 94.14, a litre price of the same fuel sold at petrol pumps.In Delhi, diesel costs Rs 86.67 a litre at the petrol pump,
but for bulk or industrial users, it is priced at about Rs 115.Despite a surge in global oil and fuel prices, PSU oil companies have not
raised retail prices of petrol and diesel since November 4, 2021, a move seen as aiding the Bharatiya Janata Party (BJP) in crucial state
assembly elections.Prices were supposed to align with cost after counting votes on March 10, but the subsequent start of the second half of
the Budget Session meant that the price increases didn't happen.Private fuel retailers like Nayara Energy, Jio-bp and Shell were forced to
hold petrol and diesel prices as they would have lost customers if rates at their petrol pumps were higher than those of Indian Oil
Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL).But now, the PSU retailers have
hiked rates for bulk users such as state bus fleets and malls and airports that use diesel to generate backup electricity.There is hardly
any bulk or industrial petrol user; diesel is widely used in industries.The vast difference of about Rs 25 per litre between the bulk user
rate and petrol pump price has prompted bulk users to refuel at petrol pumps rather than book tankers directly from oil companies.This has
led to widening losses of oil companies, already bleeding from selling petrol and diesel at way below the cost.While Nayara Energy did not
reply to an email sent for comments, Jio-bp -- the fuel retail joint venture of Reliance and UK's bp -- said, "there is a massive surge of
demand at fuel stations (retail outlets) due to increased delta of Rs 25 per cent between the retail and industrial price of diesel, leading
to heavy diversion of bulk diesel (direct customers) to retail outlets." "There is also a hefty lifting of fuel by dealers and B2B - B2C
customers, who have advanced their purchases, to top up their tanks and capacities in anticipation of the due price increase
Due to this immediate surge, there have been recording sales in March 2022, which is putting strain on the entire logistics and supply
infrastructure," Jio-bp spokesperson said.The spokesperson added that this is further exacerbated by a shortage of Tank Trucks and rakes due
to a sudden surge in demand along with limited availability of TT crew during the festive period across the industry.While private retailers
have not disclosed sales, PSU retailers have sold 3.53 million tonnes of diesel from March 1 to 15, up 32.8 per cent from a month earlier
The sales were 23.7 per cent higher year-on-year and 17.3 per cent higher than sales on March 1-15, 2019.Last week, Oil Minister Hardeep
Singh Puri said that fuel sales had jumped 20 per cent due to hoarding in anticipation of price increase, but sources insisted the sales
also increased because of bulk users queuing at petrol pumps.A Jio-bp spokesperson said that despite challenges, Reliance is fully committed
to meeting its retail customers' demand.While Nayara has 6,510 petrol pumps in the country, Jio-bp has 1,454
PSUs control 90 per cent of the 81,699 petrol pumps in the country.In 2008, PSU retailers were paid government subsidies for selling petrol
and diesel at below cost, but private retailers were kept out of such a scheme
This time around, PSU retailers have been asked to square up their losses from inventory gains and higher refining margins they are earning
But private retailers do not have refineries to cover up for retail losses.
