Petrol dealers’ association urges govt for gradual reduction in fuel prices

The petroleum association has communicated its requests to the government as a pre-emptive measure.

Amid the buzz of fuel price cuts in India, the petrol dealers’ association has requested the government for a gradual reduction in petrol and diesel prices. The Consortium of Indian Petroleum Dealers has written a letter, seen by Moneycontrol, to the Indian government and the Oil Marketing Companies (OMCs) saying the dealers experienced “a substantial financial setback” when government previously reduced excise duty on petrol and diesel.

To provide relief to consumers reeling under high fuel prices, the government reduced excise duty by Rs 5 per litre on petrol and Rs 10 per litre on diesel in November 2021, and by Rs 8 per litre on petrol and Rs 6 in diesel in May, 2022.

“The abrupt reduction in prices, as experienced in 2021 and 2022, had a severe impact on our viability and sustainability. A phased reduction, such as 50 paise per day, would allow us to better adapt to the changes, minimizing the gravity of our financial losses and helping us to sustain our businesses,” said the dealers’ association letter addressed to the Office of Prime Minister.

The petroleum association has communicated its requests to the government as a pre-emptive measure amid various media reports of fuel price cuts, Uday Lodh, President, Consortium of Indian Petroleum Dealers told Moneycontrol.

“These announcements are done directly, so we have to take anticipatory actions. Last time when government announced price cuts, dealers across the country incurred losses, some in lakhs,” said Lodh. The association has not yet received any response from the government, he added.

Queries sent to the oil ministry by Moneycontrol remain unanswered at the time of publishing this report.

In a letter to the OMCs, the association urged the marketing companies to bear and reimburse losses incurred due to reductions beyond the net dealer margin. Over 3,000 dealers across 8 states are associated with the Consortium of Indian Petroleum Dealers.

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According to the letter addressed to the OMCs, the association said, “Instances of OMC sales teams using aggressive tactics lead to potential financial losses for dealers who are already financially strained. Most of the time at month end and year end product dumping happens. Especially in the likely event of proposed RSP reduction by OMCs or MoPNG we request an immediate halt to forceful sales strategies.” Moneycontrol has access to the letter addressed to OMCs.

Indian fuel retailers have left retail prices of fuel unchanged since April 2022 despite correction in crude oil prices. Typically, OMCs – Indian Oil Corporation Ltd (IOCL), BPCL, and HPCL - revise retail petrol and diesel prices daily, based on the rolling average of international benchmark prices over the past 15 days.