Falling profits, growing costs hit petro dealers hard

Hyderabad: Why are the petroleum dealers so adamant to go on strike if their grievances were not addressed? The Association leaders say that they have been suffering losses and bearing the brunt of mounting expenditure incurred by the outlets for the last seven years but the central government had not considered their demands despite repeated representations.

According to the State Indian Oil Association (IOC) secretary Anil, the petrol outlets in the big cities were struggling because of reduced revenue and increased cost. Each outlet requires a staff strength of about 50 members which includes free air service, water supply, housekeeping to keep toilets clean and other operations of the petrol pumps.

In rural areas, retail petroleum outlets have different kinds of problems. They store stocks required for four days but are not able to sell the entire stock in four days. It takes over a week to empty their stocks.

The other major challenge was that the dealers have to pay the fuel cost in advance and if the Centre for some reason decides to reduce the price, it leads to a negative effect on their profits.

For example, the recent announcement of reducing petroleum price by Rs 2 has caused huge losses to the dealers who mainly run the filling stations in big cities like Hyderabad. Many of the filling stations in Hyderabad were selling large quantities of fuel, mainly petrol.

Reducing the prices will impact the entire business activity and profit margin goes down and there is no methodology or provision to compensate for that loss. This leads to a situation where the retail petroleum filling stations are pushed on the verge of closure. No outlet can run without profits. The indifference shown by the Union government towards the dealers is what had pushed them to announce their decision to go on strike. But keeping in view the difficulties people may face, they had decided to start with operating petrol bunks from 6 am to 6 pm.