Oil companies are reducing prices by 5, 10 or 20 paise. (File photo)
The All India Petrol Dealers Association (AIPDA) has urged oil companies to build on their profits instead of reducing oil prices daily “which is making little difference to consumers”.
In a letter sent to oil companies and the petroleum ministry, AIPDA spokesperson Ali Daruwala said demand from China has dipped following the coronavirus scare. “This has led to a drop in the Brent crude price. As a result, the petrol and diesel prices have been on the decline in the country every day,” said Daruwala.
The oil companies, AIPDA said, are reducing prices by 5, 10 or 20 paise. “This small decline is not making any difference to citizens. Nobody is talking about it. Nobody seems to be happy about. People do not seem to be bothered about it,” said Daruwala.
AIPDA said if the situation normalises in China and Brent crude prices go up, then fuel prices in the country will also go up. “If oil companies increase the price by Re 1 or 2, then there will be protests across the country. People will hit the streets. And that is the reason why oil companies should hold on to their profits earned now and not reduce the fuel prices by minimal amount. In case the Brent crude goes up, oil companies which have not reduced the prices now will not need to increase the price in future,” Daruwala said.
Oil prices have risen due to geopolitical issues in the Middle East. “After the recent events in Iran, oil prices had suddenly shot up. But India was not reliant on Iran and was procuring its stock from other countries,” he said.
AIPDA said the oil companies should save the profit that they are accruing now to build their capacity and executive expansion plans. “Some portion of the profit can by oil companies to upgrade themselves and improve their financial position,” he said.
AIPDA said the government was trying to disinvest oil companies like BPCL and HPCL as they were not doing well on the profit and revenue front.
“The government has already said that it was fast-tracking BPCL disinvestment. HPCL disinvestment was also on the cards,” he said.
Oil companies determine the fuel prices in the country by factoring in international rates of fuel, exchange rate freight, insurance, central and state taxes, as well as dealers’ commission, to make the final retail price, which is released every day in the morning.
Indian Oil, BPCL and HPCL control more than 90 per cent of fuel retail sales in the country. There are also private players in the field.