Gujarat fuel pump owners threaten to stop sale and purchases from August 12

Petrol, diesel consumers to be unfazed but CNG to be hit for an hour every Thursday

Fuel pump owners in Gujarat have threatened to stop sale of Compressed Natural Gas (CNG) for an hour on each Thursday from August 12. The dealers will also stop buying petrol and diesel from oil companies every Thursday. These threats are because the government has not revised dealer margins on Petrol, Diesel, and CNG since 2017.

According to a letter by the Federation of Gujarat Petroleum Dealer’s Association (FGPDA), “All the dealers of Gujarat have unanimously passed a resolution to go for ‘no purchase of MS-HSD’ (petrol and diesel) on every Thursday and ‘no sale of CNG for one hour’ from 1:00 PM to 2:00 PM on every Thursday with effect from August 12, 2021, till positive rise in dealer margin is declared on all three products by oil marketing companies.”

This decision taken by FGPDA on July 23 at a meeting attended by dealer representatives from all districts of Gujarat, the letter said.

“There will be no harm to the consumers of petrol and diesel because of this. The petrol pumps will continue sales as usual. Just the purchases that pump owners make from fuel depots controlled by oil marketing companies (OMCs) will not take place every Thursday. But, CNG sales to consumers will remain shut for an hour every Thursday from August 12,” Arvindbhai Thakker, President, Federation of Gujarat Petroleum Dealer’s Association told Business Standard.

The regular revision of dealer margins has been a long-standing demand of fuel pump owners. Presently the dealers earn around Rs 3.82 a litre on petrol and Rs 2.60 a litre on diesel. There is a 3 per cent dealer margin on sale price of CNG that retails at around Rs 55 per kilogramme in Gujarat.

“We want a uniform 6 per cent dealer margin on Petrol, Diesel, and CNG. This will be the gross margin for the dealer and will be inclusive of all costs that are borne for running a fuel retailing outlet. The symbolic defiance will continue till our demands are not met,” Thakker added.

At 6 per cent, the dealer margin will be around Rs 6 a litre on petrol, and Rs 5.5 a litre on diesel in most parts of the country.

The exact margin for a dealer varies as per a graded formula with a higher margin for those pumps with lesser sales and in rural areas. This grading system was introduced to compensate dealers who had lower fuel sales and were facing higher costs. These hikes were accompanied with imposition of central minimum wages on petrol pump employees that were around 50 per cent higher than most state minimum wages.

These costs add up to the retail price of auto fuels that are at record high levels across the country.