nayara energy: Reducing losses: Nayara Energy set to ration diesel, compensate dealers

Till last week, oil companies said they were losing ₹25-28 per litre on sale of diesel and ₹8-10 on petrol.

In a letter to dealers, which ET has reviewed, Nayara Energy said it will waive penalty levied for not meeting the fuel sales target.

“We shall continue to provide unrestricted supply of both products (petrol and diesel) while giving you choice on servicing the HSD (diesel) demand,” the company said, adding that it intends to incentivise any drop in HSD volume due to the above choice. “These contours will be applicable up to 31st July, 2022, and will help you plan your diesel sale more efficiently,” the letter read.

Measures Inadequate, say Dealers

Dealers said Nayara has been engaging with them over the past few months on the current crisis, but the measures taken may not mitigate losses.

“The company will be taking the average fuel sales figures of October, November and December 2021 and supply half of that to us at normal prices and the rest would be supplied to us at a premium of ₹2.50 per litre,” said a Nayara Energy dealer, adding that fuel at Nayara’s petrol pumps is priced higher than that of

, and , which impacts footfall. “With this new measure, footfall will be reduced further. This provides no relief.”

In an emailed response, Nayara Energy spokesperson said, “Nayara Energy, since the beginning of the year, has been absorbing a significant part of the substantial drop in margins. With an endeavour to reduce the impact in the longer run and provide a sustainable solution, there is a nominal price increase across our retail fuel stations.”

High Prices

Petrol and diesel prices were hiked 14 times between March 22 and April 6, after which there has been no fuel price hike. The price of crude oil has risen over 10% in the same period.

On Saturday, however, the government cut excise duty on petrol by a record ₹8 per litre and that on diesel by ₹6 after fuel prices remained unchanged for over 40 days. Petrol in Delhi will now cost ₹95.91 a litre, from ₹105.41, while diesel will cost ₹89.67, against ₹96.67. In Mumbai, a litre of petrol will cost ₹111.35 and a litre of diesel ₹97.28.

On March 16,

(RIL) and its partner BP Plc nearly halved fuel supply to its dealers owing to losses on the sale of diesel. and BP operate over 1,400 fuel retail outlets under the Jio-BP brand name.

The company has not resumed fuel supplies fully. Last week, ET reported that the companies are drawing up a compensation plan for dealers to stave off closure.

Among other measures, Nayara’s letter said it will also address the policy for brand change – from Essar to Nayara – EMI (equated monthly instalment) due to this market disruption and is exploring the streamlining monthly lease rental payment.

According to the company website, it has over 6,500 petrol pumps in the country and over 1,200 more in various stages of commissioning. Nayara plans to have a network of over 8,200 petrol pumps by 2024.