fuel supply: Duty Hike: State-run OMCs optimistic of increased fuel supply


State-run oil marketing firms expect fuel supply to normalise in the country and long queues at their outlets to reduce, after the government on Friday slapped export duty on petrol, diesel, and aviation turbine fuel which may act as a deterrent for private refiners to export.

To regulate prices and maintain the stock of petroleum products in the domestic market, the government increased the export duty. The move comes after over a week of the government bringing all petrol pumps under universal service obligation to ensure fuel availability.

“While crude prices have increased sharply in recent months, the prices of HSD (high speed diesel) and petrol have shown a sharper increase. The refiners export these products at globally prevailing prices, which are very high. As exports are becoming highly remunerative, it has been seen that certain refiners are drying out their pumps in the domestic market,” said the Ministry of Finance in a notification. The ministry has levied a cess equal to Rs 6 per litre on petrol and Rs 13 per litre on diesel exports.

“The state-run oil companies were not prepared for the 20-25% growth in demand that they saw last quarter. We expected only a 4-5% increase. But with private refiners exporting their products, there was huge pressure on (state-run) oil companies and longer queues at our retail outlets. This move will ease the pressure on our infrastructure plus reduce the queues,” said an oil marketing firm official.

Reliance Industries, Nayara Energy,

and Bharat Petroleum Corp did not reply to emails seeking comment till press time Friday.

“We hope this move will help the current fuel supply situation in the country.

and are importing petrol and diesel while private refiners are exporting it,” said a senior official from an oil company.

Shares of

plunged 7.14% Friday, even as state-run BPCL and IOCL gained 3.13% and 0.40%, respectively. Oil & Natural Gas Corp shares fell 13.4%, after the government imposed a special excise duty on crude oil production.

Dealers of both public sector and private sector oil marketing companies welcomed the export duty hike.

While dealers of public sector companies were relieved that their outlets may not run dry now, for those of private oil companies, relief may be some time away. “We are selling fuel at a premium of Rs 5 (diesel) and Rs 7 (petrol) per litre. We have unsold stock lying with us due to this price differential which has also dropped our sales to 80% for diesel and 50% for petrol. So, this move may not benefit us directly but we are hoping the (state-run) oil companies begin increasing fuel prices,” said a Jio-BP fuel dealer.

Another dealer said since the duty could make private refiners export less, they might sell the fuels to state-run oil companies and retail outlets might not run dry.


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