Petrol dealers association to oppose dynamic fuel pricing

Rujuta Parekh
Friday, 9 June 2017

The AIPDA will oppose dynamic pricing as the dealers need protection in case of continuous price reduction. The Oil Ministry is protected against price reduction and does not incur losses by collecting Value Added Tax (VAT) from consumers

Pune: After a pilot project to revise fuel prices daily in five cities, the three state-run oil companies are set to introduce dynamic pricing all across the country from June 16.

However, the All India Petrol Dealers Association (AIPDA) is set to oppose the introduction of dynamic pricing, seeking price protection to ensure that no losses are incurred.

Reliable sources said the date of implementation is likely to be deferred. “The implementation of dynamic pricing may begin from July 1 alongside the roll-out of the Goods and Service Tax (GST) instead of June 16,” the sources said.

AIPDA spokesperson Ali Daruwalla told Sakal Times that the decision will be opposed by his organisation, “The AIPDA will oppose dynamic pricing as the dealers need protection in case of continuous price reduction. The Oil Ministry is protected against price reduction and does not incur losses by collecting Value Added Tax (VAT) from consumers. If they purchase a barrel for $80 and the international price drops to $60 on the following day, they are protected from losses through tax revenues,” he said.

Daruwalla said AIPDA is seeking protection from daily changing prices on similar lines. “If we buy fuel at a particular rate on one day and the prices fall on the next, we may incur losses. Price reduction in dynamic pricing cause losses to dealers, especially small dealers in rural areas. It should be a win-win situation for oil companies as well as dealers and the issue has been taken up with the Centre,” he said.

A press release from the AIPDA stated, “First, the AIPDA has demanded that dealers must be taken into consideration before introducing dynamic pricing and proper discussions must be held. The dealer margin is fixed RSP per litre and dealers are demanding for the entire fixed margin instead of being part of speculations. Total implementation in rural areas may not be possible as the purchased product takes 10 to 15 days to get over as the sales are low and they have to order 12,000 kilo litres. The dealer will take 24 days to complete the stock. In the meantime, they keep losing revenue, if the price trend is downwards for an extended period. Also, 70 per cent pumps are in remote areas. It will be difficult for them to know the price revision on a daily basis, unless informed by the field officer every single day.”

Dynamic pricing policy, under which the retail price of fuel is changed daily in line with the international oil prices, was introduced in Puducherry, Vizag, Udaipur, Jamshedpur and Chandigarh on May 1 on a pilot basis to understand its feasibility. Until now, the oil companies revised the prices of fuel once every fortnight in line with the international crude oil prices.

 

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