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Diesel price for bulk users hiked ₹25 per litre; Pvt retailers stare at closure

By Priyanka Verma 
Updated Date

NEW DELHI: As international oil prices have continued to climb up with a near 40% gain, the diesel prices, sold to bulk users, in the ecountry have also jumped by about ₹25 per litre. However, the retail rates at petrol pumps remain unchanged.

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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 the losses of retailers.

Worst hit are private retailers like Nayara Energy, Jio-bp and Shell, who have so far 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 said.

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 being diverted to petrol pumps, they said.

In the national capital Delhi, one litre diesel costs ₹86.67 at the petrol pump, but for bulk or industrial users, it is priced at about ₹115. On the other hand, the rates of diesel sold to bulk users in Mumbai has climbed to ₹122.05/litre. In petrol pumps, the fuel rates stand at Rs94.14/litre.

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The government-run oil companies have not raised retail prices of petrol and diesel since November 4, 2021 despite a surge in global oil and fuel prices. It was anticipated that the fuel prices would start aligning with cost after the elections’ results on March 10, but the ensuing start of the second half of the Budget Session meant that the price increases didn’t happen.

The wide difference of about ₹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, who were already bleeding from selling petrol and diesel at way below the cost.

Private retailers have not disclosed sales, PSU retailers have sold 3.53 million tonnes of diesel from March 1 to 15, up 32.8% from a month earlier. The sales were 23.7% higher year-on-year and 17.3% higher than sales in March 1-15, 2019.

Oil Minister Hardeep Singh Puri last week said that fuel sales had jumped 20% due to hoarding in anticipation of the price increase.

While Nayara has 6,510 petrol pumps in the country, Jio-bp has 1,454. PSUs control 90% of the 81,699 petrol pumps in the country.

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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 now.

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