De-regularisation Impact: Two private oil firms selling fuel at a lesser price

Bengaluru: When union government de-regularised the petrol and diesel prices two years ago, it was assumed that it may strengthen the public sector oil companies. It was also predicted that this move would bring down the pressure of subsidy on the union government.

But exactly two years later, this very move has become a death knell to the public sector oil firms with two private oil firms selling the diesel and petrol below the market rates in major cities like Bengaluru. According to some truck and bus drivers, two private oil majors are selling the diesel and petrol for Rs1 less per litre than the market rate. This means, customers can buy diesel and petrol for Rs. 1 less per litre in the fuel stations operated by the two companies.

How is it possible?

According to the sources, compared to the public sector oil firms these two private oil companies have a simple/inexpensive marketing team and these expenses are limited to PSUs alone. “They are importing the crude oil from gulf nations and selling after refining directly through their franchises. Compared to PSUs, salary structure and cost of refining are very less. Their commission is also very less compared to the PSUs. So they are able to sell it at a cheap rate,” explained an officer from a PSU oil firm.

Death knell:

“when there was subsidy on the diesel rates, these companies were not able to match our rates. But once diesel rate was de-regulaised they are making huge profits as we, in the public sector, need to sell the diesel according to the production and refining cost,” he added.



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