FuelClub Discount

Hospitals, hotels, malls, cinema halls and other commercial establishments will not be able to avail subsidised diesel anymore. They have to buy costlier premium (or branded) diesel. Public sector oil companies IOC, BPCL and HPCL plan to stop supply of subsidised diesel to commercial establishments.

Retail price of branded diesel, which is currently about Rs 2.25/litre higher than normal diesel, is not regulated by the government and its price could be substantially raised, depending on the demand.

Industry in the national capital region (NCR) alone is expected to lose Rs 500 crore per year on account of this. Situation in other places is even worse as the country is facing an acute power shortage and commercial establishments rely on diesel generators. Government officials justify oil companies’ move, stating that subsidised fuel is not meant for commercial establishments.
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Saturday’s unprecedented 20% hike in aviation turbine fuel (ATF) prices has not only made domestic travel more expensive, but the fuel surcharge for international flights is all set to rise sharply as well. While airlines are expected to announce hikes by Tuesday, travel agents said an Indian carrier that flies abroad has already started charging higher surcharge from Sunday midnight itself.

“The fuel surcharge on a return Delhi-London sector flights has increased by almost Rs 1,000 from the earlier figure of Rs 10,390. Other sectors have also gone up but marginally for now. That may change by Tuesday,” said the travel agent. Unlike domestic flights that currently have two fixed levels of surcharge, each international sector has a different cess.

Singapore Airlines said it had recently hiked surcharge. “On India-Singapore sector, the surcharge has gone up from $80 to $95 per ticket. Flying to Australia via Singapore now has a surcharge of $190, up from earlier $160. Flying to US through Singapore now has a surcharge of $245, up from earlier $210,” said Gunjan Chanana, Singapore Airline spokesperson.
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Any proposal to ration oil in view of rising global crude prices could turn out to be a disaster. Imposing a formal allocation system to streamline supply and demand of petrol and diesel would, instead of resolving the problem, encourage hoarding and black-marketeering as happened in the case of kerosene.

Then there are logistical problems. On what basis would the rationing system work? Since petrol and diesel are used largely for transportation — unlike kerosene which is used mainly for household purposes — any rationing project will face difficulty in apportioning available fuel resources in an equitable manner.

Ascertaining need and working out logistics could be a nightmare. There are other growth-friendly ways to bridge the gap between rising demand for oil and costlier supply.
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While Indian public sector oil refiners have been importing diesel to meet the rising domestic demand, the private sector major Reliance Industries Ltd (RIL), which enjoys export-oriented unit (EOU) status, has been exporting the product from its Jamnagar refinery.

The surge in diesel consumption saw imports soaring more than nine times to 2,88,600 tonnes in March. The total for the year 2007-08 at 2.93 million tonnes (mt) was more than double that of the previous year. Apart from PSU refiners, domestically diesel is also procured from Essar Oil with IOC buying over 1 mt a year from the company’s Vadinar refinery. The PSU refiners are not exporting any diesel.

Overall, Indian refiners exported 17 per cent more petroleum products in 2007-08 at 39.32 mt than the previous year, with two-thirds of it being exported by private refiners. Diesel constituted over 36 per cent of the total exports. Other drivers of exports were naphtha, petrol, and ATF. In March, exports grew 8.5 per cent to 3.36 mt.
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Reliance Industries’ decision to shut down about two-thirds of its petrol pumps in the country due to continued losses today came up in the Rajya Sabha with some members demanding action against the private firm.

Raising a supplementary on an original question pertaining to capital investment by oil companies in foreign countries, Digvijay Singh (JD-U) said youths were being driven to suicide after closure of petrol pumps by the firm.

Without naming Reliance, he sought to know what action the Government proposed to take against the firm for “depriving” the youths, who had invested Rs two to three crore in the petrol pumps, of their livelihood.
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