Indian Oil asks Gujarat pump dealers to desist from one-day weekly protest

Indian Oil is asking petrol pump dealers in Gujarat to desist from participating in a one day weekly no purchase - no sale call. In a strongly worded letter, the marketing division of Indian Oil’s Rajkot office told dealers that taking part in the protest call by the Federation of Gujarat Petroleum Dealers’ Association (FGPDA) is in contravention to the agreements they have signed. The dealers are demanding a hike in dealer margins.

According to the letter by Indian Oil, the protest is causing inconvenience the public.

“Please refer to the Dealership Agreement entered into by and between our Corporation and you, whereby you have been appointed as our dealer for retail sale of petroleum products in compliance with the terms and conditions of the said Dealership agreement. As dealer of the corporation, you are expected to ensure continuous sale/supply of production namely Petrol, diesel, Compressed Natural Gas (CNG),” the letter from IndianOil’s Divisional Retail Sales Head, Rajkot Divisional Office said.

“Further, being essential commodity, it is expected that Retail Outlets ensure uninterrupted supplies and do not indulge in any action that would create inconvenience to consumers/public. Moreover, the supply points are made to idle because of your above no purchase protest,” the letter added.

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

According to Indian Oil, this no purchase act and stoppage of CNG sales for one hour on August 12, and August 19 was not in accordance with the Dealership Agreement signed between IndianOil and the dealers and is also against the Essential Commodities Act.

Dealers say their strike call is not in contravention of any rules.

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,” Arvindbhai Thakker, President, Federation of Gujarat Petroleum Dealer’s Association had told Business Standard.

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.