A Bloomberg Prime report states that 70,000 petrol pump dealers across 24 states in India have decided against purchasing fuel from oil retailers, starting today. The decision was made in protest of the lack of increase in dealer commission over the last five years.
“There was an agreement between OMCs (oil marketing companies) and dealer associations that the dealer margins will be revised every six months. However, it has not been revised since 2017,” said Anurag Narayan, president of the Delhi Petroleum Dealers’ Association, in a press conference on Monday. He further said that since 2017, the price of auto fuels and the working capital in business has almost doubled. “The dealer commission is essentially a reimbursement of our expenses like salaries, electricity bills, bank charges, etc., which have increased manifold during the last five years,” said Narayan.
The central government’s decision to reduce excise duty by Rs 13 a litre on petrol, and Rs 16 a litre on diesel, over the last six months, has further contributed to dissatisfaction among petrol pump dealers. According to association members present at the press conference, an estimated loss of Rs 2,100 crores has occurred due to these cuts. “Since June 2017, when the dynamic pricing mechanism was put in place, excise duty has been revised eight times,” said Narayan. “Of these, five-time excise duty reduction led to lower retail selling price, causing loss to the dealers,” he added.
Petrol pump dealers are demanding reimbursement of losses due to the excise duty cut by OMCs. The dealers span across 24 states: Tamil Nadu, Karnataka, Kerala, Telangana, Andhra Pradesh, Delhi, Punjab, Haryana, Rajasthan, Gujarat, Maharashtra, Himachal Pradesh, Bihar, Assam, Meghalaya, Arunachal Pradesh, Mizoram, Nagaland, Manipur, Tripura, Sikkim, Madhya Pradesh and Uttar Pradesh. The North Bengal Dealers Association will also be joining the protest. In Rajasthan, petrol pumps will remain shut from 8 pm to 11 pm.