Reports indicate that oil marketing companies (OMCs) want the government to introduce regulation that would prevent stop bulk diesel users from securing the fuel from retail outlets. Bulk quantities of diesel are sold directly from the depots of OMCs.
OMCs want to prevent bulk users of diesel from buying the fuel from retail outlets because the government allowed these companies to charge market price for diesel sale to bulk users.
Under this situation, if bulk users buy diesel from retail outlets, OMCs may not be able to charge the market price as it is difficult to distinguish between bulk and retail consumers in retail outlets.
About 12 million tonne (mn t), of the total diesel consumption of 70 mn t a year, is consumed by bulk diesel users. Under-realisation is Rs 10.31 per litre.
There are two categories of bulk customers — defence and railways & state transport undertakings (which account for 60 per cent of bulk consumers) and power plants, cement plants and chemical plants.
OMCs expect bulk diesel users to frequent retail outlets in order to escape market price for the fuel. Last week, the government had allowed OMCs to supply diesel to bulk consumers at market-determined prices.
This, the OMCs fear, might divert users to retail outlets.
Paying market-determined prices for diesel in bulk means the price would be higher by about Rs 10 per litre. This may prompt users to flock to retail outlets.
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