After the price sensitive Indian consumer virtually stopped using branded petrol and diesel, even the government conceded that sale of branded fuel has shown a sharp decline.
In terms of quantity, the decline stood at 63% for branded diesel and 36% for branded petrol in 2011-12 over the previous year.
The oil ministry has also conceded that the marketing and sales promotions of such products by the oil marketing companies (OMCs) have not yielded positive results and the sale of premium fuel has continued to decline.
The oil ministry has blamed the high price differential between branded and non-branded fuel as the main reason for the declining sales. According to official data furnished by the petroleum ministry, the sale of branded diesel dropped by 81% between FY10 and FY12 while that of branded petrol declined 55% in the same period. As a result, the OMCs have virtually stopped producing premium petrol and diesel.
The government in September had cut excise duty on non-branded petrol by R5.50 to R9.28 per litre. But it did not cut the R15.96 a litre excise duty on branded petrol and ordered the premium petrol and diesel be priced at cost. This has also contributed to a dip in the sales, a senior government official said. Recently a top OMC official conceded that ?sales are almost nil?.
Sources said the representatives of petrol pumps associations have recently sought the permission from the oil companies to convert all their fuel storage tanks for storing only non-branded fuels. The official added, ?We are rationalising the infrastructure. We will produce branded fuels only if there is demand from dealers.?
According to industry estimates, the country has approximately 45,000 petrol stations, of which almost 40% are run by IOC. If there is a widespread demand for non-branded fuel, it may put pressure on the OMCs, experts said.