One person’s cheaper petrol can be another person’s poison.
The unexpected Diwali-eve duty cut on petrol and diesel has saddled pump owners with big stocks they bought at a higher price but can be sold only at lower rates.
Individually, consumers may not have gained much from the cuts that translate into gains of over Rs 5 a litre of petrol and over Rs 11 a litre of diesel after steep increases for several weeks.
But since each dealer holds several hundreds of litres of stocks bought at the old rates, he or she stands to lose a substantial amount, several pump owners across Bengal said on Friday.
A combination of factors appears to have played a part in dealing the blow to the dealers.
“There was a huge rush to stock up on fuel on Wednesday because of Diwali the next day (Thursday). Bharat Petroleum was closed yesterday (Thursday) and Indian Oil is closed today (Friday). So, everyone wanted to stock up,” said a petrol dealer.
Oil companies had also pushed sales asking pumps to lift stock during the month-end, which they say is routine. Just when the dealers had stocked up, the duty cuts were announced – the timing probably decided by the bypoll setback to the BJP although the Narendra Modi government cited the need to control inflation.
“In Darjeeling, we had to sell petrol bearing a loss of Rs 5.82 per litre and diesel at a loss of Rs 11.77 per litre,” said a dealer.
The price of petrol changed from Rs 112.24 to Rs 106.42 and for diesel the change was from Rs 102.92 to Rs 91.15 in Darjeeling between Wednesday and Thursday.
“We bought products at the old rate,” said the dealer. Payments have to be made the day stocks are lifted from oil depots.
A dealer with multiple outlets in south Bengal said: “Let’s put it this way. All the inventory gain I made from April 1 because of rising fuel prices have gone away and I ended up on the losing side marginally simply because all my outlets had stocked up. I may not have lost any money, had this cut taken place on the 10th (of the month, when inventories are usually lower than that at the beginning of a month).”
Petrol and diesel prices went up by Rs 19.72 a litre and Rs 17.81 a litre, respectively, since April 1 before the excise duty cut.
He pointed out that the capital requirement of fuel dealerships has been steadily rising over the past year.
However, dealers in Bengal say they are better off than their counterparts in some sates like Karnataka where states have also cut VAT rates.
Bikash Agarwal, general secretary of the North Bengal Petrol Dealers’ Association, said: “Increase and decrease in our products’ price are gradual. This sudden and steep cut hit the dealers hard.”
John Mukherjee, president of the Indian Oil Dealer’s Forum, said depending on volume of stock and location, each petrol pump in Bengal has suffered losses ranging from Rs 3 lakh to Rs 4 lakh.
Indrajit Roy, who owns two petrol pumps in Birbhum district, said that “as of today (Friday) I suffered a loss of Rs 10 lakh” since the slash in rate.
A dealer pointed out that an increase in price has no bearing on their profits. “We get a commission of Rs 3.64 a litre on petrol and Rs 2.33 a litre on diesel, irrespective of the day’s selling rate. This commission has not been changed in the last three years,” the dealer added.
