Pvt oil cos will now find bulk diesel sales lucrative
Bulk buyers, including state transport corporations, Indian Railways, defence and industrial customers, who represent around 20% of the total retail sales of around 90 million tonnes a year, will now be required to pay market rates for the fuel.
The private oil marketers are also watching how the the decision to allow OMCs to raise diesel prices for retail consumers by around 50 paise/litre a month (exclusive of taxes) would be implemented. Till petrol and diesel prices are deregulated, the private OMCs may have to keep retail outlets inactive.
The calibrated price hikes being planned are more limited than expected, as the oil ministry last month indicated that it was working on a proposal to raise diesel prices by Re 1 a month for 10 months.
Under the new rules, bulk buyers of diesel would have to pay market rates, a move that analysts reckon could open up a new market for private players and cut subsidy on diesel by 18% or around Rs 13,000 crore at current oil prices. The prices paid by bulk diesel consumers are slightly less than those retail consumers pay because the former excludes dealers’ margins (around Re 1/litre) and discounts offered by OMCs to increase sales.
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