Chennai: The talk of the country is the hike in fuel prices and more recently, in the past 36 hours, their reduction. The development will bring in a loss of Rs 10,500 crore in the current financial year, according to Finance Minister Arun Jaitley.
But here is the catch – fuel prices increased to Rs 15 over the past 12 months, breaking the trend of increasing prices only up to Rs 6 every year until last year, meaning the cash reserves ought to be optimistic.
Although the increasing fuel prices bring with them problems for the general public, it is not like the dealers are having a free run either. For instance, dealer charges, despite the rising costs, were not talked about.
Speaking about the matter to News Today, Tamilnadu Petroleum Dealers Association (TNPDA) president, K P Murali, said, “With the fuel price increase, our expenditure is increasing as well. No return on investment (RoI) has been considered by the oil marketing companies (OMCs) for the past one year despite increase in fuel prices.”
Dealer margins, while a subject to be debated about, comes under reimbursement of expenditure that the agent incurs. “According to the Apurva Chandra government report, the reimbursement is split into 90 per cent for expenditure and 10 per cent for dealer margin. However, OMCs leave out many factors in that. Dealers are struggling to meet their margin. They have not been open like they used to be once since the daily revision of prices came into play,” he told this reporter over a telephonic conversation.
Murali also mentioned about the sales drop that came as a by factor of the fuel hike over the years. “We have seen a 20 per cent drop in sales. If fuel touches Rs 100, we are definite that sales will halve (for diesel). Most lorry operators will not be able to run as well. As far as petrol customers are concerned, 80 per cent of our customers are two-wheeler riders and they are visibly affected,” he said.
Further, there is the fact that dispensing units (DU) have to be recalibrated to house three-digit numbers in the fuel price meter. If not, when fuel touches or crosses Rs 100, the number will return to nought, bringing a whole set of further confusion into the picture.
With more than 60,000 fuel stations in India and their containing from two to 40 dispensing units, recalibration might well turn out to be tricky.
According to experts, the DUs come under the control of OMCs and they might, until the units are recalibrated, stop the every day fuel price revision. But they also note that with stocks of OMCs deep-diving after the announcement came from the Finance Minister Thursday, the practice might well be put on hold for a while.
As the prices are still heavy, despite the reduction of Rs 2.50, all eyes are now on the State governments for they have been advised to reduce a further Rs 2.50 by revising their taxes. Will they do that? Only time will tell.