NEW DELHI: The government on Friday cracked down on private fuel retailers by bringing all petrol pumps under the USO (universal service obligation) to prevent holders of fuel retail licences from wilfully shutting or starving outlets of stocks to minimise losses on petrol and diesel.
But the private players have found a workaround in the pricing freedom and are charging Rs 2-5 per litre more than the artificially low rates of state-run retailers to discourage sales.
The government’s move comes amid reports of petrol pumps of state-run retailers running dry in several states due to a sudden rush of panic buying as closure or curtailment by private players sparked rumours of a shortage.
Under USO, entities with licence to retail fuels have to supply petrol and diesel on demand to all customers without discrimination throughout the working hours. They will have to maintain minimum inventory levels specified by the Centre and ensure availability of fuel to the customers at reasonable prices.
For months now private players have been curtailing stocks at outlets and many of them were shut in recent times to avoid losses resulting from a freeze on pump prices by state-run retailers, which serve 90% of the market, whereas crude is hovering around $120 per barrel. The current pump rates correspond to $85 per barrel of crude. Recently, the private players raised petrol price by Rs 2-3 a litre and diesel by Rs 3-5 to discourage sales.
This shifted their retail and bulk consumers to state-run outlets and strained the latter’s supply logistics, leading to delayed stock replenishment — especially those far from supply points. The problem was notable in Rajasthan, Maharashtra and Karnataka where the private players have a substantial presence.
The state-run retailers have extended working hours and introduced night shifts at their depots and terminals to raise the number of tanker despatches. Additional fuel inventories are being allocated for the affected areas to cope with the additional demand.
