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No rise in bulk sales, say retailers

Allowing sales of diesel in bulk at the market price has opened the entire segment for competition

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Rejecting reports that have started buying from filling stations instead of fuel depots after prices were increased, retailers have said they haven’t seen any dramatic increase in sales since price revision.

According to retail players, even if the prices are high, depots offer credits and other discounts to bulk consumers, which they don’t normally get at filling stations. Of the total diesel consumption of 70 million tonnes (mt) per annum, bulk diesel sales are close to 12 mt. Bulk sales happen directly from the oil depots of the oil marketing companies. If bulk users buy from retail outlets, it may be illegal.

There were reports that bulk consumers have turned to retail stations to buy diesel after prices at depots were increased following the government partially decontrolled last month.

“It’s true that there’s a difference of Rs 9.5 per litre and in some states, price went up even by Rs 11 (between prices at depots and retail stations), which is really hurting the bulk consumers. But we have not seen a dramatic rise in sales after that. Some filling stations have seen a minor rise of, say, five per cent, but it does not mean that bulk consumers are depending on retail outlets,” said a dealer in Delhi.

They are also critical of what they call a lack of clarity on the policy front. “Though the announced a partial decontrol of diesel, there is confusion as the word bulk has not been defined. As there is no guideline or policy on bulk customers for different rates till now, has advised its dealers to follow as single retail sale price,” said Ajay Bansal, general secretary of the Federation of All-India Petroleum Traders (FAIPT).

An official, however, said certain bulk users were going to retail outlets for fuel. "Direct consumers are being billed at market prices whereas retail users are being billed at subsidised rates. We are, however, experiencing that certain bulk users are frequenting retail outlets to avail of fuel. But at this point, we cannot stop them from seeking fuel from our retail outlets as they are our customers," said the official, who did not want to be named. The companies, however, would put in place a system for making a distinction between retail and bulk consumers.

Though market pricing is already implemented at the depot level, oil marketing companies suggest there is no dramatic fall in sales at the depot level. Bulk consumers, including Indian Railways and state transport corporations, have raised protests against the move. Even bulk users like Corp have officially decided not to buy fuel from depots.

“It is not true that there is a huge rise in sales at retail outlets as bulk customers are shifting to local stations after the price rise. However, the problem arises when people come with big containers to buy diesel for their generator sets. In such cases, what is the maximum quantity that can be supplied? We have requested oil marketing companies to issue clear written instruction supported by a government notification, defining who all can be supplied diesel and who can be refused," Bansal added. A dealer cannot refuse supply to the user as petroleum products are part of the Essential Commodities Act.

“The sales from a filling station in Delhi on a normal day would range from 3,500-50,000 litres. In the case of bulk consumers, they fill from depots in tankers, with a size of 12,000 or 20,000 litres. Then how is it possible for us to feed them in such a huge numbers. Don’t you think oil marketing companies will notice this? Even if some illegal trade happens in some pumps, it will not be of the range of more than a 1,000 litres per day,” said one of the dealers.

Allowing sales of diesel in bulk at the market price has opened the entire segment for competition, with private players also set to join the bandwagon. The largest threat is to IndainOil, which holds 78 per cent of the bulk diesel sales market. According to dealers, it is impossible for a pump to supply to larger consumers.

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