New Delhi: Diesel at retail pumps now costs as much as Rs 40 a litre less than fuel sold to bulk consumers. As a result, bulk diesel users are queueing up at retail pumps meant for regular consumers. Private retailers Jio-bp and Nayara Energy have responded by limiting how much diesel a bulk customer can buy.
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Jio-bp outlets are now selling no more than 50 litres of diesel per customer per day, people in the know said. At Nayara Energy pumps, transaction limits range from 70 litres to 200 litres.
The gap comes from two sets of prices moving differently. Retail petrol and diesel prices have not changed since May, a freeze aimed at controlling inflation. Over the same period, international crude prices have climbed to around USD 108 a barrel. Since, bulk fuel prices have tracked international crude oil prices closely, the rise has led to a gap of about Rs 40 a litre between diesel sold at regular retail pumps in comparison to bulk fuel retail pumps. Industrial and other bulk consumers usually buy fuel through dedicated consumer pumps. According to the people, the widening difference between the two is pushing large users towards retail outlets.
As private fuel retailers have placed a cap on sales, if public sector retailers, like Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) fail to do so, the bulk consumers could now start lining up at their regular retail pumps for filling up their tanks. Hence, it is quite likely that they will also bring in quantity restrictions.
Bulk consumers cover a wide range of users. Factories and manufacturing plants burn diesel to run machinery or backup power systems. Telecom companies, hotels, malls, data centres and hospitals depend on diesel generator sets for emergency power.
Some of these users are now buying 400 to 600 litres at a time from retail outlets, the people said. That is far more than an individual motorist typically buys. The extra demand is running down fuel inventories at individual stations. Each outlet can store only a limited amount of fuel, they said, and restocking through the supply chain takes at least a couple of days. The people said falling stocks are what led Jio-bp and Nayara to set daily purchase limits.
Jio-bp said in a statement that its network was supplied. "All Jio-bp Mobility Stations are operational and adequately stocked to serve our customers. We continue to offer our high-performance Active Technology Petrol and Diesel and remain committed to providing seamless and reliable refuelling services across our network."
The company linked its measures to demand from non-transport users. "Given the prevailing demand dynamics, we are taking appropriate measures to ensure equitable availability of fuel for mobility and transportation needs, particularly in view of demand from industrial and other non-transport use. These measures are intended to support the broadest possible access to fuel for customers based on demand conditions," it said. "Our focus remains on ensuring fuel availability and a seamless customer experience across the Jio-bp network."
Jio-bp is a joint venture between Reliance Industries and the UK's BP, and it runs 2,227 petrol pumps in India. Nayara Energy is backed by Russia's Rosneft and has 7,105 outlets. Both are small next to the public sector retailers, which own most of the country's 104,069 petrol pumps. IOC alone has 43,289 outlets. BPCL had 25,587, and HPCL owns 25,238.
Petrol and diesel prices in India are officially free from government control. Even so, they have seldom moved with costs over the last 10-to-12 years. When international oil prices rise, pump rates are not raised straight away, and when they are raised, the increase often falls short of the rise in costs. Public sector retailers revise rates together despite full pricing freedom, often after 'informal' consultation with the government. In the past, when international prices have fallen, the government has raised taxes to take away the gains.
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The limits set by Jio-bp and Nayara show the distortion caused by the widening gap between retail and bulk diesel prices. Sources said industrial consumers could keep shifting their purchases to retail pumps if the gap persists. That could strain supplies at stations serving motorists, they said. Private retailers could then be forced to ration sales even though fuel is available in the wider supply system.
