18.9 C
New York
HomeBusinessDiesel Prices Hiked For Bulk Users; Will You Have to Pay More...

Diesel Prices Hiked For Bulk Users; Will You Have to Pay More for Petrol, Diesel Now?

Bulk Diesel Price Hike: The price of diesel sold to bulk users has been hiked by about Rs 25 per litre in line with a near 40 per cent rise in international oil prices, but retail rates at petrol pumps remain unchanged, sources said told PTI on Sunday. Petrol pump sales have jumped by a fifth this month after bulk users like bus fleet operators and malls queued up at petrol bunks to buy fuel rather than the usual practice of ordering directly from oil companies, widening the losses of retailers.

An impending rise in fuel prices has led customers, both bulk and retail, to buy oil in advance, translating into a surge in sales this month, and putting the entire supply chain under pressure, RIL told Moneycontrol.com. “There is a massive surge of demand at fuel stations (retail outlets) due to increased delta of around Rs 25 per litre between retail and industrial price of diesel, leading to heavy diversion of bulk HSD (direct customers) to retail outlets. There is also a very heavy lifting of fuel by dealers and both B2B and B2C customers, who have advanced their purchases, to top up their tanks and capacities in anticipation of price increase which is overdue,” RIL said.

How Does the Bulk Diesel Price Rise Impact – Oil Companies

As retail fuel prices continue to remain unchanged, despite elevated crude prices, oil marketing companies continue to suffer huge losses, in the marketing business. The gross marketing margin on diesel and petrol is now negative Rs 12.5/litre and Rs 9.9/litre. Gross marketing margin is an OMC’s income on selling every litre of petrol and diesel. The same had remained negative now for the fourth consecutive week. Hence to limit losses, OMCs hiked prices of bulk diesel by Rs 25/litre. However, the bulk users are now using fuel pumps for their requirements, thereby widening OMCs losses.

The Rs 25/litre hike in diesel prices does not impact retail rates, so in Mumbai price for bulk users has been hiked to Rs 122.05 as compared to Rs 94.14 a litre price of the same fuel sold at petrol pumps. This 40 per cent jump in prices is in-line with international oil price movement and also the hikes were seen in aviation fuel which is now up 50 per cent since January.

Despite the incessant rise in crude oil prices and increasing under-recoveries for OMCs, retail pump prices are still steady. Retail prices have been unchanged for over four months now. However, the price hike won’t have a direct impact on the common man, as petrol pump prices or retail rates (rates at which commoners purchase petrol and diesel) have remained the same.

High global crude oil prices bring about major concerns for India as the country imports 85 per cent of its oil demand. A transfer of the price hike to retail prices would impact the inflation rate and not increasing retail prices would impact the financials of OMCs, according to experts.

It is feared that the war will spill over into India’s retail fuel prices soon. Experts earlier were of the view that the geopolitical crisis would push India’s domestic prices of petrol and diesel up by Rs 15-22 per litre.

Oil prices jumped $2 on Monday as Ukrainian forces dug in against heavy Russian attacks, while major oil producers reported they are struggling to produce their allotted quotas under a supply agreement. Brent crude futures climbed $1.96, or 1.8 per cent, to $109.89 a barrel at 0039 GMT, adding to a 1.2 per cent rise last Friday. U.S. West Texas Intermediate (WTI) crude futures rose $2.09, or 2 per cent, to $106.79, extending a 1.7 per cent jump last Friday.

Although the increase in crude oil prices has not been transferred to consumers of petrol and diesel so far, oil marketing companies raised jet fuel prices by a steep 18 per cent on Wednesday. In a first, aviation turbine fuel (ATF) prices are now above the Rs 1 lakh per kilolitre mark.

Stay Connected
16,985FansLike
52,146FollowersFollow
2,458FollowersFollow
spot_img
Must Read
You might also like

LEAVE A REPLY

Please enter your comment!
Please enter your name here