Export tax fails to boost retail fuel sales by private refiners
Despite export taxes on automotive fuels, state-owned oil marketing companies (OMCs) continue to bear the additional burden of ensuring a steady supply of fuels. Customers are missing out on private outlets as petrol and diesel are more expensive at these stations by Rs 7/litre and Rs 5/litre, respectively.
Nearly 60 million people visit fuel retail outlets in the country daily.
As on July 15, a liter of petrol in Delhi at a Jio-BP outlet cost Rs 103.9 while diesel cost Rs 94.7. At a state-run OMC outlet in the nation’s capital, petrol was available at Rs 96.72 per liter and diesel at Rs 89.62 per litre. Nayara, owned by Rosneft, sells a liter of petrol at Rs 101.32 and diesel at Rs 92.5.
India had just over 83,000 fuel retail outlets as of the end of May, of which about 8-9% are privately owned. On average, JIs meet around 90% of domestic transport fuel demand.
A senior official said CMO’s share of retail sales has risen further in recent months since private retailers began to favor lucrative export markets over the domestic market following Western world sanctions on Russia since its aggression against Ukraine.
The government tried to stop these trends of private retailers first by extending the scope of the Universal Service Obligation (USO) in mid-June even to rural areas and later by making exports of more expensive petrol and diesel by levying a tax – Rs 6 a liter for petrol and Rs 13 a liter for diesel – via a notification issued on 30 June.
While these measures eased supply constraints at private outlets, higher prices relative to MOCs did not help customers. “Volumes have not yet been transferred to them due to rising prices. CMOs still meet around 95-96% of demand,” the official said.
The OMC has not raised prices since May 22 even as oil prices remain high and recorded underrecoveries of 19.9 rupees per liter for petrol and 36.5 rupees per liter for diesel at the end of June.
The decline in India’s basket, a mix of raw sweet and sour quality Indian imports, to below $100 a barrel on July 14 after hitting a 10-year high of $121.18 a barrel on June 22, could provide some cushion at the WTO. On July 14, the Indian basket was trading at $99.76 a barrel.
Jio-BP, which has 1,470 outlets across the country, said that to avoid inconveniencing customers, the company withheld any price increase from the prevailing RSP, even at the cost of a loss of more of Rs 2,000 crore in the last 3-4 months.
“While Jio-BP continued to serve customers at all of its outlets, continued adverse circumstances forced the company to nominally revise the retail price of gasoline and diesel, which were also partially reduced,” Jio-BP said in an email response. to FE. “Jio-bp will continue to absorb substantial losses even at the revised prices,” the company said.
Jio-BP said the company was securing fuel supplies to meet customer demand across the country and undertaking daily inventory monitoring and replenishment to ensure there was no drying up. in its outlets and has ensured the same for the past two weeks. Nayara did not respond to questions from FE in this regard.