Why Are Diesel Purchase Limits Being Imposed at Fuel Stations Across India?
New Restrictions on Diesel Purchases
New Delhi: Private fuel companies, including Jio-bp and Nayara Energy, have started limiting diesel purchases at their stations. This decision comes as industrial and bulk consumers flock to petrol stations to take advantage of lower retail prices, which has strained supply chains.
At Jio-bp, customers can now buy a maximum of 50 litres of diesel per day, while Nayara Energy has set limits ranging from 70 to 200 litres, according to sources familiar with the situation.
State-owned fuel retailers like Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL) are also expected to follow suit with similar restrictions.
Despite international crude oil prices rising to approximately USD 108 per barrel, retail prices for petrol and diesel have remained stable since May. Meanwhile, prices for industrial and bulk consumers have aligned more closely with global rates.
This discrepancy has resulted in a price difference of up to Rs 40 per litre between retail diesel and that supplied to bulk consumers, prompting many large users to purchase fuel from retail outlets.
Bulk consumers include factories, telecom companies, hotels, and hospitals that rely on diesel for machinery and backup power. Some of these users are buying between 400 to 600 litres at a time, far exceeding the typical amounts purchased by individual drivers.
The increase in bulk purchases has put a strain on fuel inventories at retail stations, which have limited storage capacity. Replenishing these stocks through supply chains can take several days.
As a result, Jio-bp and Nayara have implemented daily purchase limits to manage their fuel supplies effectively.
Jio-bp, a collaboration between Reliance Industries and BP, operates 2,227 petrol stations across India, while Nayara Energy, backed by Russia's Rosneft, has 7,105 outlets. Public sector retailers dominate the market, owning the majority of the 104,069 petrol stations nationwide, with IOC alone managing 43,289 outlets.
In a statement, a Jio-bp representative assured that all stations are operational and well-stocked, emphasizing their commitment to providing reliable refueling services. They noted that the measures taken are aimed at ensuring fair fuel availability amid rising demand from industrial sectors.
A spokesperson from Nayara did not respond to requests for comments.
While petrol and diesel prices in India are theoretically free, they have not consistently reflected international costs over the past decade. Retail prices often lag behind increases in international oil prices, and when adjustments are made, they do not always align with cost changes. Public sector retailers typically coordinate their pricing strategies, often after informal discussions with the government.
If international oil prices decline, the government has previously raised taxes to capture some of the benefits.
The limits set by Jio-bp and Nayara underscore the challenges posed by the widening gap between retail and bulk diesel prices. If this trend continues, industrial consumers may keep diverting their purchases to retail stations, which could lead to supply shortages for regular motorists and compel private retailers to ration sales, even if fuel is available in the broader supply chain.