Published On : Tue, Apr 7th, 2015

Most Vidarbha petrol pumps reeling under heavy losses, to declare April 11 as ‘No purchase day’

nagpur petrol pumb

File Pic:

Nagpur.

VPDA is Vidarbha Petroleum Dealers’ Association. It is an umbrella body that covers Dealers of all petroleum companies – whether Government, or private. Like Indian Oil, Bharat Petroleum, Shell, Reliance, Essar etc.

They held a meeting at the Nag Vidarbha Chamber of Commerce in Nagpur yesterday and they have a shocking thing to admit.

According to Harmender Singh, President of the Nagpur wing : this year end i.e. March 31st 2015, all of them are posting losses between Rs. 7 lakh to Rs. 30 lakhs or more. (Average of Rs. 15 lakhs) Vidarbha is not in isolation, the case is the same for all over Maharashtra and all over the country too. To protest this point and make their demands petrol pumps all over India will be following 11th April, Saturday as NO PURCHASE DAY and single shift day i.e. no one will buy petrol/ diesel from Oil companies. The next day being Sunday, there will automatically be no sale. So by Monday, the situation will be really dire and many smaller dealers will not get material.

If demands are not met, this will be repeated again on 17th and 18th April.

Again, if there is no response from Government and Oil companies they will go on indefinite strike from 27th April by stopping purchase indefinitely.

According to our sources there is unity from all over the state and the country with many regional associations too gearing up for the strike.

Why has this happened? There are many issues identified.

These are the list of eleven grievances prepared by the Consortium of Indian Petroleum Dealers (CIPD):

  1. Increase in Dealer margins.On the petrol / diesel they sell for Oil Marketing companies ( OMCs) the dealers’ margin is hardly approximately Re one. They want an increase of 5% which will give them Rs. 3 per litre. This slight increase in profitability could cushion them from the uncertainties of the business, they feel.
  2. Commissioning of new Retail Outlets – different companies float tenders / inquiries and give out petrol pumps to new players indiscriminately increasing levels of competition and creating a position of over supply.
  3. Simple Exit policy with land release. After a Dealer has realized that running a petrol pump isn’t really that lucrative a business as she/ he thought it would be and wants to exit the business and use his land otherwise, the Company just does not release his land. It is therefore next to impossible to exit from the business.
  4. Withdrawal of Marketing Discipline Guidelines. (MDG)Dealers are governed by stringent and difficult conditions like design of the pump, availability of toilets etc. which are more stringent for Public Sector Companies like Indian Oil.  But these rules are arbitrary and  do not apply to private company dealers.
  5. Penalty clause – Again, if PSU pumps do not comply with exact standards of of MDG they are levied heavy penalty clauses. Nowhere in other commercial establishments like Railways, Roadways, Cinemas etc. are such draconian measures followed. They should be withdrawn for pumps too.
  6. OMCs (Oil Marketing Companies) are promoting sales by Violations of Dealership agreements – Some products, which are heavily priced up to Rs. 1000 a litre like MS and HSD are forced upon dealers and they have to sell prescribed quantities. If they do not, they are harassed in other ways.
  7. Decanting of product by by Tank/ Truck at Retail outlets only by flow meter. Oil companies still follow old, manual method of measuring fuel sold by marking level on rod which is inserted in the tanker. This method should give way to flow meters.
  8. Unscheduled, unprecedented revision of Retail Selling Price – this is the real crux of the matter why losses are piled up. With prices of oil fluctuating wildly internationally and nationally Dealers want some rationality in when price is changed. If it is done on scheduled dates like 29th 0r 30th of every month or then on 15th, ( as already agreed upon) Dealers will manage inventories accordingly. But Oil Companies, in order to mitigate their own losses do not inform dealers till after they have maximum inventory, like on 17th or 18th of the month and then declare decrease in price – which they knew of two days prior. So they pass on their losses to dealers who can lose Rs. 4 – 5 lakhs on any such day if prices decrease suddenly.
  9. Simplification of reconstitution policy – If a Dealer wants to add a partner or change structure of his company the OMCs take inordinately long time to  accept and incorporate change. Process is so complicated, it takes years sometimes.
  10. Partially revised ROs to to be made full. Sometime dealers are given only one product to sell, either diesel or petrol depending on conditions. This results in loss of business. Therefore they demand that every pump should have both.
  11. National Highway & State Highway approach road permission. Where pumps are not situated on service roads but are directly on the highway they have to make separate approach and exit lanes to the highway. This could be a very costly proposition as dealers would have to acquire more land adjacent to their pumps which is often not available or could be sold at exorbitant price. When this condition is not applicable to other establishments on the highway like dhabas or hotels, why it should be compulsory for pumps? Some pumps have been closed because of location of culverts etc. over which they have no control, they should be allowed to open immediately.

Apart from these conditions laid down by CIPD, the Maharashtra President of FAMPEDA (Federation of All Maharashtra Petroleum Dealers Association) has brought up demands like abolition or rationalization of VAT, LBT etc.

The demands are being to State Governments, Central Government and Oil companies, everyone together. In a communication to members Mr. Uday Loth President of FAMPEDA warns that they should be prepared to go in for strikes and agitations whose severity will increase till their demands are not met.

Sunita Mudliyar