Oil marketing companies (OMCs) like Indian Oil Corporation (IOCL), Hindustan Petroleum Corporation (HPCL), and Bharat Petroleum Corporation (BPCL) are considering a revision in the formula for deciding dealer margins, to insulate them from the fluctuations due to daily pricing.
This comes at a time when the battle between OMCs and fuel retail dealers are intensifying, with several state dealers associations threatening to go on an indefinite strike from August 1 if there is no increase in margins. Associations claim that about 53,000 retail outlets under state-run public sector undertaking companies have lost Rs 400 crore so far, starting from June 15 when daily pricing was launched nationally.
“We have mooted a new formula through which inventory will be owned by the company in petrol and diesel, similar to the case of compressed natural gas (CNG) and liquefied petroleum gas (LPG). The new margin model will take into account our increased operating cost, value of net fixed assets, including land and evaporation loss,” Ajay Bansal, president of All India Petroleum Dealers’ Association, told Business Standard.
An official close to the development confirmed that an idea to revise the formula was mooted and it was under the consideration by the ministry of petroleum. “We will soon take a call on this idea,” he said. However, the official refused to divulge further details.
Dealers claim that their purchase price and selling price are different due to daily price revision, as they buy the fuel in advance. “We have so far suffered a loss of Rs 400 crore on our margins due to daily pricing and hence some sort of insulation is required,” Bansal added. Out of the total 59,595 retail outlets in India, 54,607 are under PSUs, while Reliance Industries (1,400), Essar (3,499), and Shell (85) run the remaining outlets. While the three PSUs have some company-owned, company-operated outlets, the rest are dealer-run.
According to dealers, despite intervention by Petroleum Minister Dharmendra Pradhan to solve the crisis, OMCs are yet to take a call on the margins. “Several associations, including Punjab, Haryana, and Kerala, are going for no-purchase soon. We are left with no choice but to go on indefinite strike from August 1 if companies fail to take a call in this regard as daily price change is wiping out our margins,” said B T Ram Kumar, joint secretary of the Consortium of India Petroleum Dealers. Bansal added that dealers across the country are facing a daily loss of about Rs 25-30 crore.
Before taking the decision of daily revision nationally, the three OMCS had conducted a 40-day experimental run in five cities — Chandigarh, Jamshedpur, Puducherry, Udaipur, and Visakhapatnam. IOCL is monitoring the daily price revision round-the-clock through 87 control rooms (at 70 divisional offices, 16 state offices and its Mumbai marketing head office) to offer quick redressal of queries from the field.
OMCs vs dealers
Out of the total 59,595 retail outlets in India, 54607 are under PSUs, while Reliance Industries (1400), Essar (3499) and Shell (85) run the remaining outlets.
Before taking the decision of daily revision nationally, the three OMCS had conducted a 40-day experimental run in five cities — Chandigarh, Jamshedpur, Puducherry, Udaipur, and Visakhapatnam
Associations claim that starting from June 15 when daily pricing was launched nationally, dealers lost at least Rs 400 crore
