Private fuel marketing companies such as Jio-bp and Nayara Energy have advised their retailers to keep their pumps open and not display a dry out sign board, and also increased fuel prices to discourage sales.
The move comes after the government brought all petrol pumps under the universal service obligation (USO), mandating that they must maintain supplies at reasonable prices during their specified working hours.
Petrol pump operators ET spoke witwith said Jio-bp and Nayara have increased fuel prices between Rs 2 and 7 per litre.
Fuel marketers have been making a loss on each litre of petrol and diesel they sell as state-run companies have not increased retail prices for almost two months despite rising crude prices in international markets. To minimise their losses, private players cut supplies to dealers and kept prices higher to discourage customers, industry insiders said.
The government brought all private fuel operators under USO amid reports of long queues outside several state-owned companies’ pumps in some states. Pump operators, however, said this will only increase their costs – for keeping pumps operational – while sales will remain low due to higher prices.
“This move by the government helps little. The company has increased diesel price by Rs 5 a litre and petrol price by 7 a litre. Who will come to buy fuel from us at this pfrom us at this price?” a Jio-bp retailer said on the condition of anonymity. “Whatever little fuel supplies we get from the company, now that may also be not sold.”
Nayara Energy spokesperson said, the company has been compelled to absorb the difference between rising crude prices and retail selling price since February 2022. Despite the price revision in April 22, the extent of losses due to under redue to under recoveries remain huge. In the month of June alone Nayara Energy's loss would be close to Rs.700 crores."
"We have been absorbing losses to a similar extent since February as we are committed to servicing domestic demand. This financial pain is being further exacerbated as the institutional demand due to higher prices has shifted to retail, thereby threatening/ impacting the viability of our retail business.
We are hopeful that the Government will intervene and help mitigatmitigate the growing losses of Industry and enable companies to work towards a sustainable model and strengthen India’s energy security," Nayara Energy spokesperson added.
“We have been asked not to barricade our outlets and that company officials will be visiting our outlets to keep a check. We have also been asked to sell less and maintain stock of fuel so they can show the government that we are maintaining fuel stock ,” another retailer of a private fuel marketer said.
Nayara retailers have been selling fuel at a premium of Rs 2 per litre over state-owned marketers’ prices. Industry body Federation of Indian Petroleum Industry (FIPI), had sent a letter to the petroleum ministry seeking support in matters related to retail selling pricing of petrol and diesel.
Both, Jio-bp and Nayara Energy have charted out a compensation plans for their dealers.
While Jio-bp will support the dealers through a monthly rental scheme for the next four months, beginning 1 June, Nayara Energy said it will waive penalty levied for not meeting the fuel sales target.