Oil companies, dealers fail to arrive at agreement on daily price revision

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Mumbai: A meeting between the petroleum dealers association and oil companies held in Mumbai on Tuesday to discuss the implementation of daily revision of fuel prices remained inconclusive.

With two days to go for the daily price revision schedule to kick in across India, petroleum dealers will now meet oil minister Dharmendra Pradhan in New Delhi on Wednesday in an attempt to resolve the matter.

The government on 8 June decided to switch to daily revision in diesel and petrol prices nationwide starting 16 June, with oil firms having earlier piloted the model in select cities.

“We couldn’t reach a conclusion today. The oil companies think we can implement the daily fuel pricing without automation of the outlets, while we don’t think we can. Tomorrow, we will meet the minister and see what happens on this issue,” said Ajay Bansal, president of the All India Petroleum Dealers’ Association.

Petrol pump owners belonging to the association on Sunday said they would stop buying fuel from 16 June. The dealers have been demanding that daily price changes should be brought into effect only after all retail outlets are automated. Of the 56,000 fuel retail outlets, only around 20,000 are automated so far.

The ministry has asked the oil marketing companies—Indian Oil Corp. Ltd, Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd—to automate all outlets by March 2018.

Bansal’s association represents dealers who sell 86% of the auto fuel sold in India. Private companies such as Reliance Industries Ltd and Essar Oil Ltd sell the rest.

“We have been trying to tell the dealers that if there is a one rupee drop in fuel prices in a fortnight, rather than losing that one rupee on the entire stock held by them, they would be losing hardly 5 paise on some day or 7 paise on some day in case of daily fuel price revision. So it evens out and the losses minimize. But the meeting was not very fruitful,” said a senior official from an oil marketing company, requesting anonymity.

The dealers’ primary concern regarding automation stems from the fact that in case of an automated outlet, price changes can be pushed from a central server to each outlet.

However, in the case of a non-automated outlet, the dealer would have to feed the pricing change manually or hand the task over to a trusted worker.

“The dealers are concerned about changing prices manually at night as this could crop up transparency issues,” added the senior oil marketing official cited above.

The decision to move from fortnightly to daily price revision was taken after the successful implementation of pilot projects in Udaipur, Jamshedpur, Puducherry, Chandigarh and Visakhapatnam from 1 May.

Daily price revision is an international practice wherein retail prices are linked to the changes in international oil prices. However, changes in global oil prices would be reflected in local prices too. In fortnightly price revisions, which the OMCs have been practicing thus far, short-lived sentiment-driven price spikes get ironed out.