Fuel shortage: India curbs bulk fuel buying at retail pumps, caps diesel sales

NEW DELHI: India has barred commercial fuel buyers from purchasing gasoline and diesel from retail stations and capped daily diesel purchases to prevent local shortages amid disruptions to global supply chains due to the war in the Middle East. Retail fuel station dealers have been directed to sell no more than 200 litres of diesel per customer or vehicle a day, according to a government order issued late on Thursday, which added that buyers cannot resell the fuel. Commercial users such as trucking companies have been buying diesel from retail outlets of state-run companies, where prices are lower than at bulk supply points, leading to shortages at pumps in some areas. The government said restrictions were needed to ensure equitable availability of petrol and diesel, prevent diversion and hoarding, and maintain uninterrupted fuel supplies at fair prices. PRICE ARBITRAGE Diesel, which accounts for about 40% of India's fuel demand, is sold at market rates to industrial users at about 40 rupees per litre more than retail prices, the government said. Diesel sales by private retailers, which price fuel closer to market rates, fell 58% last month, while those of state-run companies surged, with some areas seeing increases of more than 30%, the government said. "The measures are aimed at large/bulk consumers who should not be procuring diesel from Retail Outlets to take undue advantage of the price arbitrage," it said. India is a net exporter of refined fuels, but higher domestic sales at subsidised rates are hitting the profitability of state retailers Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp. The three companies control about 90% of India's more than 100,000 fuel stations. Referring to the Iran war, the order said geopolitical tensions have strained global petroleum supply chains, shipping logistics and product availability, making prudent management and conservation necessary. The measures will remain in force for an initial period of up to 90 days unless revoked earlier, the order said.