CHENNAI: On June 16, the dynamic fuel pricing system, wherein prices are revised depending on daily market conditions, came into effect. During the period since, the retail price of petrol has come down for five days straight, barring Wednesday when the previous rate was maintained.
The declining fuel price, which is now a rupee cheaper than what it was a week ago, has delighted the public, even as bunk owners, faced with losses, are contemplating contingency measures. However, both are sure to reverse their positions when the price does go up.
For 37-year-old S Narayana, a sales executive, the new system of price revision is a welcome move. Though he agrees the price can increase, Narayana says, “I am able to absorb this gradual price movement, as compared to the earlier system, when the rates are significantly affected either way.” His statement echoes the position of many other motorists, who reasoned that the shock produced by fortnightly revisions was at times difficult to handle.
On the other hand, bunk owners, in particular those dealing in huge volumes, claim they are sustaining losses running to the tune of a few lakhs. The losses are on account of maintaining a minimum stock, purchased at higher cost, even as the price is currently going down.
Speaking to Express, Haider Ali, general secretary of TN Petroleum Dealers Association, said there needs to be a sort of price protectionism, as they operate on a very less profit margin. “We are currently meeting bunk owners to decide the next course of action,” he said.
In addition, there is another major challenge faced by the bunk owners. At present, there are around 4650 fuel stations in the State, of which a majority are not automated. Without automation, fuel stocks cannot be properly monitored, and prices can not be changed daily at 6 am. This then requires extra human resource, familiar with computer, to be at hand to manually feed the prices, Ali added.
“Manual calibration is not efficient. Only around 20 per cent of bunks are properly automated. Without the necessary infrastructure, dynamic fuel pricing won’t be possible,” Ali said.
The dynamic fuel prices, aimed at bringing the Indian system on par with global practices, seeks to reflect the fall or rise in international oil prices.
But how much of its benefit is passed on to end-users?
Experts are keen to point out that it is difficult to co-relate the international prices and retail selling price. Vivek Jain, associate director, Large Corporates, India Ratings & Research, says retail selling prices in the country depend on various other factors such as excises and local taxes. “This explains the non-reduction of prices, when the international crude prices dropped by more than half in recent past,” he said.