Private players seek govt intervention as fuel shortage rises in India

FIPI says companies are suffering a loss of Rs 20-25 a litre on diesel and Rs 14-18 a litre on petrol at present due to the non-revision of prices

Despite the government bringing in private players under the universal service obligation last week (USO), there was a dry out of fuel outlets across the country on Sunday. While Madhya Pradesh, Rajasthan and Karnataka were mainly affected last week, reports of fuel shortage are now coming from Tamil Nadu, Chattisgarh, Odisha, Kashmir and other states too.

This comes as Industry body Federation of Indian Petroleum Industry (FIPI), which represents private fuel retailers such ad Jio-bp and Nayara Energy, approached the government stating that under-recoveries will limit the ability of private players to make further investment and expand. FIPI had said that companies are suffering a loss of Rs 20-25 a litre on diesel and Rs 14-18 a litre on petrol at present due to the non-revision of prices.

“Private sector players have completely stopped supply. Public sector outlets are seeing a shortage of supply from the companies. This has led to the crisis in almost all the states now,” said Ashok Badhwar of the Federation of All India Petroleum Traders (FAIPT).

According to industry sources, public sector undertakings – Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) – are seeing a 20 per cent increase in average daily supplies now. When asked about the complaints by dealers, a senior executive from a state-run major said, “All executable indents placed by the dealers are being executed and sufficient product is available at all the supply locations. Locations are operating beyond the normal working hours to meet the increase in demand.  There has been an increase in demand on account of seasonal surge due to agricultural activities. Tourism is in full swing and sales are at record high in tourist places.
 

As per the data shared by PSUs, sales of diesel and petrol saw an increase of 44 per cent and 42 per cent respectively, between June 1 to 16 this year, as compared to the same time last financial year. “It is to be noted that private oil Companies have a sizable retail network presence in the markets and there has been a huge shift in both petrol and diesel volumes to PSU OMCs due to dry outs/higher prices at private sector outlets,” the official added.

On Sunday, Chattisgarh chief minister Bhupesh Baghel wrote to Petroleum Minister Hardeep Singh Puri seeking regular supply of petrol and diesel in the state.

He said that as compared to a buffer stock of around four to five days, fuel outlets in the state are seeing a stock of just one day now. He also raised concerns regarding supply to the agriculture sector.

Last week the government had expanded the universal service obligations (USO) to the private sector as well. Through this, fuel outlets will have to maintain supplies at specified working hours and at reasonable prices. According to the media reports and sources, those private outlets that are providing fuel on Sunday were doing it at a higher price compared to a PSU outlet.

Fuel prices remained unchanged since May 21 when finance minister Nirmala Sitharaman announced a cut in excise duty on petrol by Rs 8 a litre and diesel by Rs 6 a litre.