Chief Minister uneasy as Puducherry to test dynamic fuel pricing

This Union Territory appeared worried on Wednesday after learning that it figured on the list of five cities in the country where fuel prices would go dynamic from May Day.

Published: 13th April 2017 05:00 AM  |   Last Updated: 13th April 2017 05:00 AM   |  A+A-

Express News Service

PUDUCHERRY: This Union Territory appeared worried on Wednesday after learning that it figured on the list of five cities in the country where fuel prices would go dynamic from May Day.

In other words, the prices of petrol and diesel would fluctuate on a daily basis based on international Brent crude and currency rates. At present, new prices are announced every fortnight based on a 15-day weighted average of crude and RBI’s currency rates.

State-owned fuel retailers Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL), will launch the pilot project here from May 1. If successful, it would be replicated across the country.

But since there was little clarity on how the roll out would happen, there was all round confusion. Chief Minister V Narayanasamy said it could lead to complications and affect trade and commerce. “Assume a petroleum dealer obtains a consignment at a particular rate from the oil company. If his stock has not exhausted, and the price drops the next day, he will have to sell it at the lower rate. Who will compensate for his loss?” he wondered. Even consumers wouldn’t find it easy keeping track of the new rates each day, he argued.
“It is not good for business,” said L Periyasamy, secretary of the Puducherry Petroleum Dealers Association. People, especially in rural areas, come to the city with a limited amount of money to purchase a certain quantity of petrol or diesel. If the price is higher, then they may not want to spend on fuel. They may instead put off their buy by a day hoping for a better price. This could make the dealers lose business, he said.

Lorry Owners Association president N Senthil Kumar echoed Periyasamy. Generally lorry services are provided on a monthly, quarterly or half-yearly basis and rates are fixed accordingly. If diesel prices go up on the day of filling up the tank, it cannot be passed on to the customer. That could lead to 10 to 15 per cent loss in revenue, he griped.

Higher rates would be fixed taking into consideration the fluctuating price of diesel, which could increase freight rates. After the recent lorry strike, the Centre has promised a revision of rates on a monthly basis, claimed Senthil Kumar. “We already have a problem with toll plazas where the contract has not been renewed, collecting toll. The dynamic pricing of diesel is a new headache,” he said.

Auto rickshaws, tourist taxis, omni vans and bus operators would also feel the pinch, as the fares cannot be revised on a daily basis, said Sethuselvam, secretary of the auto rickshaw association.

The cost of crude is just about 15% of what you actually pay at the fuel station. The rest is refinery cost plus transportation and taxes. In Puducherry, the value added tax (VAT) on petrol is 20.15%; for diesel it is 16.65%.

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