Petroleum dealers urge OMCs to reduce fuel prices gradually

Petroleum dealers urge OMCs to reduce fuel prices gradually

With speculations of a proposed reduction in fuel prices doing the rounds, petroleum dealers have urged the State-run oil marketing companies (OMCs) to reduce prices in a gradual manner so that they can manage their stocks in a better manner and reduce losses.

Tamil Nadu Petroleum Dealers Association president K. P. Murali said that the last time when excise duty was cut, it happened during a Deepavali and since dealers had stocked up, many suffered heavy losses. “This time, if the companies can stagger the reduction over a period of say 10 days, it would help dealers to manage stocks and their finances. The daily pricing mechanism where changes happened in a few paise was introduced by the OMCs so that consumers and dealers would not be hurt,” he said. Previously, two price cuts happened during November 2021 and May 2022.

Mr. Murali also said that as an alternative, dealers could also be informed a few days ahead so that they can manage to keep minimal stocks. “With the New Year just a day away, dealers would be well-stocked since that is the norm during festivals. If the reduction happens in one go, it will financially hurt a vast majority of dealers,” he explained.

Many other State dealer associations and the Consortium of Indian Petroleum Dealers (CIPD) too have written to OMCS underlining the need for this. “There are over 85,000 fuel outlets across the country and of these, around 80% are low-volume dealers. They would be selling around 4 kilolitres per day. At any given point dealers would have to maintain three days stock or have fuel in 70% of their tankage. In such a situation, if the quantum of reduction is ₹ 10 per litre, such dealers would stand to lose ₹ 1,20,000 in one stroke,” explained CIPD’s K. Suresh Kumar.