Pump operators urge Oil Ministry to revise petrol, diesel margins

Petrol pump operators have urged the Oil Ministry to review and revise the dealer margins paid by the oil marketing companies (OMCs) to them considering that operating costs have increased.

In a letter to Oil Secretary Neeraj Mittal, Federation of All India Petroleum Traders (FATPT) President Ashok Badhwar sought his “immediate intervention” to review and revise the margins on petrol and diesel.

“Petroleum dealers seek only fair reimbursement of legitimate operating costs and a reasonable return on capital that enables us to deliver uninterrupted service to the nation as well as emergency services,” he urged Mittal.

Dealer margins were last increased in 2017 with some riders.

There was also a marginal increase in October 2024 after settlement of the Marketing Discipline Guidelines (MDG), which is a framework to govern operations, service standards and penalties between PSU OMCs and retail outlets (ROs).

Monty Sehgal, FAIPT’s national spokesperson, told businessline “Due to higher prices of fuels, the input cost has increased drastically since 2020 and whereas the inflation component is being ignored by OMCs for which we have urged government to intervene and find solutions to our legitimate demand.”

Petroleum dealers are working under immense financial stress due to increased inventory cost and squeezing volumes, he added.

In October 2024, when the MDG settlement was reached among the OMCs and various national associations, Badhwar said adding, a meagre dealer margin hike was granted to the dealers after a gap of seven years ignoring the Inflation Index as the market conditions changed drastically between 2018 and 2024.

“Although, we were assured that, with the deadlock resolved, subsequent dealer margin hikes would be implemented at regular intervals, taking into account the increased expenses. We regret to note that the essence of the settlement has not been adhered to, and the dealer community feels betrayed. We request your immediate intervention to restore the faith of the network by ensuring that the OMCs honour their commitments,” he added.

For a standard retail outlet selling 170 kilo litres per month, the net business return left for a dealer is only around ₹37,500 per month after meeting operational costs whereas more than 80 per cent of the ROs in the country are operating at sales of less than 100 KL per month, Badhwar said.

“Considering the current capital investment, operational expenses, and round-the-clock commitment required, and decreased volumes, we humbly request you to kindly advise the corporate management of the OMCs, to evaluate a realistic revision of net dealer remuneration. An updated uniform remuneration of ₹2 lakh per month would ensure financial stability and dignity commensurate with our investment,” he added.

Badhwar also pointed out that various state governments have revised wages since the last dealer margin hike. These revised wages need to be incorporated to arrive at a fair and updated wage component in the dealer margin keeping in mind three-shift operations.

Staff salary has now become the single largest expenditure item in retail outlet administration. Under the New Labour Code, an employee can work strictly up to 8 hours per shift, he added.

“The current margins being extended to our dealers are inadequate for more than single shift operations. We humbly request you to advise the OMCs to rework and restructure the salary component within the dealer margin framework to align with the statutory 2 hour-shift and 3 hour-shift reality under the New Labour Code,” he urged Mittal.