Even as the petrol and diesel prices were recently brought down by cutting excise duty by the central government, fuel retail dealers are complaining they are under pressure to keep the fuel sales under control and the situation might lead to fuel shortage at retail outlets and law and order problems.
In a recent letter to the oil industry coordinator, which is BPCL, the Consortium of Indian Petroleum Dealers said, “We, the OMC (oil marketing company) dealers, are now being pressurised by the companies to be cautious in our sale of fuel, both petrol and diesel, especially the latter and that we should not sell more and above the normal sale,” according to an ET report.
Reliance BP Mobility Limited (RBML), the joint venture between Reliance Industries and BP, has told the government that the private fuel retailing sector is unsustainable after public sector firms frequently froze petrol and diesel prices far below their costs, according to a PTI report.
OMCs froze fuel prices for 137 days, beginning in November 2021, and again went into a 47-day break. Reports claim that the freeze in the fuel prices led fuel retailers to incur losses since February 2022. As of May 16, net under-recoveries in the industry stood at Rs 13.08 per litre for petrol and Rs 24.09 per litre for diesel.
The central government on May 21 cut excise duty on petrol by Rs 8 per litre and that on diesel by Rs 6 per litre. The cut was estimated to translate into a reduction of Rs 9.5 per litre in petrol prices and Rs 7 per litre in diesel, after taking into account its impact on other levies. After this, several state governments, including Kerala, Maharashtra and Rajasthan, also cut VAT on petrol and diesel, thus further reducing rates in those states.
After the excise duty cut by the Centre, the price of petrol in Delhi has been reduced to Rs 96.72 per litre, while the per-litre diesel price now stands at Rs 89.62. In Mumbai, petrol was retailing at Rs 111.35 per litre after the latest excise duty cut, while diesel was being sold at Rs 97.28 a litre.
Recently, Nirmala Sitharaman said the excise duty on petrol and diesel that has been deducted is not shareable with states and will be fully borne by the Centre. “Basic Excise Duty (BED), Special Additional Excise duty (SAED), Road & Infrastructure Cess (RIC) and Agriculture & Infrastructure Development Cess (AIDC) together constitute Excise Duty on petrol and diesel. Basic ED is sharable with states. SAED,RIC & AIDC are non-sharable.”
She added that the excise duty reduction of Rs 8 per litre on petrol and Rs 6 per litre on diesel (effective from today) has entirely been made in Road & Infrastructure Cess (RIC). “Even in November ’21, the reduction of Rs 5 per litre in petrol and Rs 10 per litre in diesel was entirely made in RIC,” She said in another tweet.
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