Media reports suggest that the government’s move to create dual-pricing system in the diesel market has created leakages with bulk buyers turning to retailers for taking advantage of lower prices.
While oil marketing companies (OMCs) are allowed to charge market-determined price for bulk diesel buyers, they must charge a subsidised price for retail consumers.
In a bid to avoid paying high price, bulk consumers are learnt to be turning to retail market. There is a difference of over Rs 10 per litre between the two prices.
Bulk diesel buyers are the railways, defence forces, power, cement and other core sector firms, fleet operators and state transport utilities.
Since the dual pricing order was issued on January 17, the state fuel retailers are losing direct, or bulk, sale business by as much as 13,000 kilolitre a day, latest industry sales data shows.
At the same time, retail sales have recorded a growth of 11 percent-13 percent, up from 5 percent-8 percent earlier. At current prices , a back-of-envelope calculation shows a switch of 13,000 kl per day would entail daily subsidy burden of Rs 14 crore.
Diesel consumption at present stands at some 70 million tonne a year. About 12 million tonne of this, or roughly 18 percent, is sold to bulk consumers.
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