Business & Economy

Petroleum Dealers Urge Phased Reduction in Fuel Prices to Mitigate Financial Challenges

Petroleum dealers, represented by the Consortium of Indian Petroleum Dealers (CIPD), have appealed to the Prime Minister and state-owned oil refining and marketing firms to adopt a phased approach rather than an abrupt reduction in petrol and diesel prices. The CIPD emphasized the significant financial setbacks experienced by the industry when fuel prices were slashed in November 2021 and May 2022, and underscored the need for a more considerate strategy.

President Uday Lodh and General Secretary K. Suresh Kumar of CIPD conveyed their concerns about the existing challenges faced by petroleum dealers, including the prolonged absence of commission revisions. In their letter to oil marketing companies (OMCs), the CIPD recommended implementing substantial reductions in a phased manner, suggesting increments of 50 paise or less per day. This gradual approach, they argued, would help dealers navigate the transition more smoothly, minimizing financial losses and supporting business sustainability.

Additionally, the CIPD urged OMCs to bear and reimburse any losses incurred by dealers beyond the net dealer margin due to fuel price reductions. The letter also called for an immediate halt to forceful sales strategies and a downward revision in the dead stock level, which imposes a substantial financial burden on dealers.

The dead stock level, currently set at 10% of tank capacity, is primarily designed to protect OMC devices in underground tanks. However, the CIPD proposed a reconsideration of this level, advocating for a reduction to the minimum possible to alleviate the financial strain on dealers.

Addressing the Prime Minister, the CIPD clarified that they do not contest the necessity of reducing fuel prices but requested a phased implementation. They emphasized that abrupt reductions, as witnessed in 2021 and 2022, had severe impacts on the viability and sustainability of petroleum dealers.

The petroleum industry faces a unique challenge where dealers incur losses on existing stock when prices drop but experience gains when fuel prices increase. The CIPD’s appeal seeks to strike a balance that ensures the industry’s stability while acknowledging the necessity of adjusting fuel prices in response to broader economic factors.

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