Cheaper at pumps, costlier in bulk: Jio-bp, Nayara cap diesel sales; PSUs may follow: Report

Private fuel retailers Jio-bp and Nayara Energy have capped diesel purchases at their petrol pumps as industrial and other bulk consumers increasingly shift to retail outlets to take advantage of cheaper fuel, putting pressure on station-level inventories and prompting public sector oil companies to consider similar restrictions, people aware of the incident told PTI.

Jio-bp outlets have capped diesel purchases at 50 litres per customer per day, while limits at Nayara Energy outlets range from 70 litres to 200 litres. Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd are also likely to impose quantity restrictions, according to the report.

Also read: Oil firms face Rs 530 crore daily fuel losses as crude surges: ICRA


The shift has been driven by a widening price gap between retail diesel and fuel sold to bulk consumers. Petrol and diesel prices at retail outlets have remained unchanged since May even as international crude oil prices have risen to around USD 108 a barrel. Bulk consumers, who generally buy fuel through dedicated consumer pumps, have meanwhile seen prices move more closely in line with international rates.

The resulting difference is as much as Rs 40 a litre, making retail diesel significantly cheaper for large users and encouraging them to buy directly from petrol pumps.

Bulk users turn to petrol pumps

Factories and manufacturing plants that use diesel to run machinery or backup power, along with telecom companies, hotels, malls, data centres and hospitals relying on diesel generator sets, are among the bulk consumers.

Some such users are now purchasing 400 to 600 litres at a time from retail outlets, far exceeding the quantities normally bought by individual motorists, PTI said, quoting people in the know.

The larger purchases are putting pressure on inventories at individual fuel stations. Each outlet has finite storage capacity, while replenishment through fuel supply chains can take at least a couple of days.

The drawdown in stocks has prompted Jio-bp and Nayara to introduce daily purchase limits, with the measures aimed at preserving fuel availability across their retail networks.

Jio-bp, a joint venture between Reliance Industries and UK-based BP, operates 2,227 petrol pumps in India, while Russia's Rosneft-backed Nayara Energy has 7,105 outlets.

Public sector oil companies dominate India's retail fuel network, which has 104,069 petrol pumps. IOC operates 43,289 outlets, BPCL 25,587 and HPCL 25,238.

Also read: 50 litres per customer: Private pumps ration diesel as oil shock deepens

Jio-bp cites 'prevailing demand dynamics'

A Jio-bp spokesperson said all its mobility stations were operational and adequately stocked, while acknowledging measures to manage demand.

"Given the prevailing demand dynamics, we are taking appropriate measures to ensure equitable availability of fuel for mobility and transportation needs, particularly in view of demand from industrial and other non-transport use. These measures are intended to support the broadest possible access to fuel for customers based on demand conditions," the spokesperson was quoted as saying.

"Our focus remains on ensuring fuel availability and a seamless customer experience across the Jio-bp network," the spokesperson added.

Petrol and diesel prices in India are formally market-determined, but retail rates have rarely moved in tandem with costs over the past 10-12 years. Pump prices are not immediately aligned with international oil costs when crude prices rise, while increases in retail rates have often not matched the rise in costs.

Despite having pricing freedom, PSU oil retailers have historically revised retail rates in tandem, often after what has been described as "informal" consultation with the government.

The government has also in the past raised taxes when international oil prices fell, taking away part of the benefit of lower crude costs.

The widening retail-bulk price differential is now creating pressure at fuel stations as industrial consumers redirect purchases to cheaper retail outlets. If the gap persists, large users could continue drawing diesel from pumps primarily serving motorists, potentially straining station inventories and forcing private retailers to ration sales even when fuel is available elsewhere in the broader supply system.

(With inputs from PTI)