Indian bulk buyers shift to retail pumps for cheaper diesel, straining supplies

NEW DELHI: Industrial customers in India are increasingly buying diesel from cheaper retail outlets of state-run companies rather than the usual bulk supply points, causing shortages at the pumps in some areas, a government official said.

Diesel sales at pumps in some regions have jumped 20% to 30% as prices for industrial buyers climb to 40 to 42 rupees a litre higher than retail pump prices, said Sujata Sharma, a joint secretary in the federal oil ministry on Thursday.

The retail price of a litre of diesel is 91.58 rupees in New Delhi.

The spike in demand is adding to losses for state-run Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp, which are already selling diesel at below market prices for retail customers.

“Bulk customers should take from bulk supply points and retail buyers should go to the petrol pumps,” Sharma said.

State fuel retailers are monitoring sales at outlets facing shortages and are seeking support from local authorities and police to curb purchases by bulk consumers, she said.

India hikes fuel prices for second time in a week

Preliminary fuel sales data show Indian state retailers’ diesel sales from May 1 to 15 surged nearly 11.5% to about 3.8 million metric tons from a year earlier, while gasoline sales rose nearly 19% to 1.8 million tons.

Indian state retailers’ diesel sales are also driven by higher prices charged by private fuel retailers and rising consumption from farmers using diesel-powered generators for irrigation during the harvesting season, she said.

BPCL on Thursday said its gasoline sales surged by 16.38% to 1 million kilolitres between May 1 and 20 from a year earlier, while gasoil rose by 16.7% to about 1.7 million kilolitres.

The company said it is focusing on maintaining seamless supplies across smaller cities and remote markets, “where localised demand spikes and precautionary buying tendencies have been observed in recent days”.