By Vikas Dhoot
Dealers in 22 states will refuse to buy any diesel or petrol from oil marketing companies on May 31 in protest of the overnight excise tax reductions announced earlier this month and the establishment of a mechanism to protect them from future changes in excise duty.
Excise duty has been revised eight times since June 2017, when the dynamic pricing mechanism for fuels was implemented, and five of those revisions resulted in lower retail selling prices and losses for dealers, according to a statement from the Delhi Petrol Dealers’ Association and counterparts from Tamil Nadu, Gujarat, Rajasthan, Maharashtra. Karnataka and Kerala, as well as 15 other States.
Pricing policy that isn’t controlled
As a result of the deregulation of the gasoline industry in India, public sector oil companies generally keep retail prices on hold despite severe fluctuations in the worldwide price of oil. Between November 2021 and March of this year, fuel prices remained steady, and have been locked again since April 6, despite the rise in global crude oil prices.
‘We demand that the OMCs reimburse us for the damages we have suffered due to the excise decrease and that future price changes follow the dynamic pricing mechanism,’ said the statement. Because of the higher excise tax, dealers cannot earn a profit, and because of the lower tax, they should not be burdened with losses.
Earlier this week, the Telangana Petroleum Dealers’ Association announced a plan to stop purchasing fuel from the OMCs on May 31. Dealers in fifteen additional states were expected to follow suit, according to the ad. In the wake of the tax cuts, more states, including those in the northeastern region, such as Andhra Pradesh, West Bengal, Punjab, and Uttarakhand, joined the call for greater commissions and protections against revenue losses.
Despite an agreement with oil marketing companies to review dealer commissions every six months, petrol pump owners have pointed out that they have not been reviewed since 2017, despite the fact that their working capital requirements have risen as fuel prices have nearly doubled since then.
As they put it, “The OMCs have ignored our frequent demands to modify dealer commissions, and by doing so, they are making their own network financially unviable.”
There have been three times since 2017 when the excise duty on fuel products has been increased, but the retail price has remained unchanged, according to the oil marketing companies (OMCs). Retailers expect OMC reimbursement as well as deregulated and dynamic pricing mechanisms for gasoline and diesel goods for future price changes.
Source: The Hindu