Dealers say oil companies want them to cut diesel and gasoline sales

Retailers call on CMOs not to ration supplies; refiners say some dealerships face credit issues

Retailers call on CMOs not to ration supplies; refiners say some dealerships face credit issues

Oil traders have written to the government expressing concern over increased pressure they are facing from state-owned oil marketing companies (MOCs) to restrict the sale of diesel at their outlets as more and more wholesale consumers are looking to take advantage of the relatively lower price at which fuel is sold to retail buyers.

“We have been advised to restrict selling to new customers and only cater to our existing customers,” the Consortium of Indian Petroleum Dealers (CIPD) wrote to the Oil Industry Coordinator in a letter, the content of which was shared with The Hindu. “Fear of supply shortages will cause panic,” CIPD President Mr. Narayana Prasad and Secretary General K. Suresh Kumar wrote, calling on companies not to ration fuel supplies.

At the heart of the ‘dictat’ that the CIPD has highlighted is a differential price – up to ₹25 per liter – which is charged to bulk diesel consumers such as transport companies, fleet operators of private buses, industries and generator operators.

Another reason oil companies ask dealers to watch is the loss of revenue due to gasoline and diesel prices not always adjusting in line with crude oil prices. Although petrol and diesel have been deregulated, leaving CMOs free to set prices, this is actually done in coordination with the government.

A recent decision by two CMOs to stop offering products to dealers on credit has also impacted consumer supply. The abandonment of the practice of allowing dealers to pay later has led to “out of stock” situations at fuel outlets in several locations, trade sources and senior officials from both WTOs have confirmed. .

A senior HPCL official, speaking on condition of anonymity, explained that the “out of stock” was caused by some dealers not being able to pay their dues and place withdrawals under a new system that required them to pay for supplies received by the end of the day.

A senior Indian Oil Corporation official, who also preferred not to be named, said IOC provided products on demand. “We have not imposed any restrictions on supply,” he said, admitting that the same may not be true in the oil industry, especially since the prices of products have been suspended for a long time, which has posed challenges for the WTO.

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