Fuel dealers to lose lakhs after excise duty cut

The government's move to cut excise duty on petrol and diesel by ₹8 per litre and ₹6 per litre, respectively, has dealt a financial blow to fuel retailers who are already dealing with a curtailed fuel supply from refiners.

Half-a-dozen dealers ET spoke to said they suffered significant losses after the government on Saturday evening announced a cut in excise duty on petrol and diesel by ₹8 per litre and ₹6 per litre, respectively.

Since fuel terminals are shut on Sunday, most dealers had stocked up on fuel on Saturday evening before the announcement came. Now they are selling the fuel at a loss.


"I had bought 50,000 litres of fuel on Saturday, which included central and state levies," said a fuel retailer from Mumbai who requested not to be identified. "Now I have lost over ₹3,60,000. This had happened during Diwali, too, when the government announced a sudden duty cut."

Another fuel dealer said, "Inflation is a reality for us too. Our sales have not stabilised post Covid-19. Last November, on the eve of Diwali, the government announced a sudden excise duty cut and I lost nearly ₹10 lakh. Why can't these cuts be introduced in phases like fuel price increases?"

The Centre had on November 3, 2021, announced a reduction in excise duty on petrol by ₹5 a litre and on diesel by ₹10 a litre. This was expected to boost consumption, mitigate inflation, and bring down input costs for farmers and businesses.

Since private fuel dealers of Reliance Industries-BP Plc and Nayara Energy have been facing a rationing of fuel, they said losses this time were lesser than November as they did not have much fuel to stock up.

But dealers of state-run oil marketing companies suffered losses of over ₹10 lakh.

"Oil companies have not revised our commission since 2017," a third dealer said. "When diesel was retailing at ₹50 a litre and petrol at ₹60, our commission was the same as it is now, when both are retailing above ₹100. Despite repeated requests, our commission has not been increased." Dealers earn a commission of ₹2.58 a litre on diesel and ₹3.85 on petrol. They have been demanding 5% commission.

Oil companies are losing ₹25-28 per litre on diesel and ₹8 per litre on petrol as they have not increased fuel prices in tandem with rising crude oil and product prices. Petrol and diesel prices have not been revised since April 6. Since then, crude oil price has gone up 13.3%.