‘Sudden’ payment mode shift creates shortage at few fuel stations, triggers panic buying bout in Gujarat

The panic fuel-buying situation in Gujarat was also addressed at the inter-ministerial briefing on “recent developments in West Asia” in New Delhi on Monday evening. Sujata Sharma, Joint Secretary (Marketing and Oil Refinery) in the Union Ministry of Petroleum and Natural Gas said, “These are not dry outs. We have checked it from the field and all petrol pumps are working normally and adequate fuel is available at all such facilities.”

In a statement issued in the evening, the Indian Oil Corporation of India (IOCL) said that adequate stock of petrol and diesel is available in Gujarat and that supplies to retail outlets are continuing smoothly.

How panic spreads

Earlier in the day, one pump in the Shivranjani area of Ahmedabad put up a signboard: ‘Petrol/ Diesel is on the way, will open once the tanker comes’. Several fuel pumps in Rajkot experienced heavy rush due to “misinformation” in the fog of the West Asia war.

The panic was apparently caused by the “sudden change” made by oil marketing companies (OMCs) leading to cash crunch among pump owners and dealers, which in turn resulted in shortage at a few fuel stations.

Rajkot Collector Om Prakash said, “This is an unnecessary panic. There was a payment issue of the dealers and there was panic messaging, which led to the situation. There are 386 petrol pumps in Rajkot and all have stocks. In fact, we are currently getting 5% more petrol and 10% more diesel than two months ago.”

Petrol and diesel retailers also said that India has 70 days’ reserve of crude oil so there is no shortage as of now. The sudden change in the payment system led to the situation, they said.

Change in payment system

Speaking to The Indian Express on the reason for the shortage in a few fuel stations, Mehul Patel, president of the Federation of Gujarat Petroleum Dealers Associations (FGPDA), said, “The companies used to give fuel to the dealers on credit. For example, Indian Oil (IOCL) used to give five days credit while Hindustan Petroleum (HPCL) used to give 2-3 days. But now, due to the war in West Asia, the three public sector companies (PSUs), including Bharat Petroleum (BPCL), last week changed their system to advance payment. Currently, they would dispatch petrol and diesel tankers only after the payment was reflected in their account.”

“However, it happened so suddenly that the dealers could not arrange the funds all of a sudden because we dealers also give monthly credit to our institutional customers. So the funds got stuck over the weekend, leading to retail outlets not receiving supply on time. This led to shortage at a few retail outlets,” said Vadodara-based Patel.

Institutional customers are those who consume large amounts of fuel per day and need a regular supply including transporters, schools, government departments, manufacturing units and logistical firms.

Usually, a dealer orders two to three tankers a week depending on the demand. Some petrol pumps order 2-3 tankers per day as well. One tanker carries 20,000 litres (20 kilo litres) of fuel, both petrol and diesel (mix load). The oil marketing companies send only full loads. One tanker of fuel costs approximately Rs 20 lakh.

Petroleum Dealers Associations said that currently about 30-40% retail outlets (pumps) are facing the situation in Gujarat with the problem being exacerbated mainly on the highways and rural areas where logistics is difficult and tankers take more time to reach.

Retail fuel dealers in Rajkot met officials of IOCL on Monday morning. A member of the delegation said, “We had a meeting with IOCL officers to find out why the outlets went out of stock during the weekend. They said it was because of the payment issues and logistics of fuel reaching the pumps. We requested that this should be handled immediately otherwise, it causes panic as we saw today. They have assured that it will be taken care of, but they also said that the payment system cannot be changed back from advance to credit because they are incurring huge refining losses per litre.”

Speaking on the refining losses and the possibility of rising petrol and diesel prices if the conflict between the US-Israel and Iran are not resolved soon, a FGPDA postholder said, “Pre-war, the OMCs were getting crude oil at USD 60 a barrel which has now reached USD 118-120 a barrel. We were told that the OMCs are now facing a refining loss of about Rs 36-38 per litre. The Government of India has not increased the rates of petrol and diesel for the customers. But sooner or later, this will have to be passed down to the end user. For now, the companies are absorbing the losses and so they have formulated this advance payment policy for retail dealers so that the companies don’t face a liquidity problem.”

IOCL statement

In a statement, the IOCL said that all Indian Oil Petroleum depots and terminals are well stocked with petrol and diesel to meet anticipated demand.

“IndianOil would like to appeal to the public not to indulge in panic buying or unnecessary stocking of fuel, as adequate supplies of petrol and diesel are available and the supply chains are functioning normally. We further appeal to the public to strictly avoid unsafe practices such as storing petrol in plastic cans, bottles or other unapproved containers for future use, as this poses serious safety risks.”

What customers say

Customers appeared concerned as they waited in queues to refuel. A businessman, Uday Triveni in Ahmedabad said he had come for a routine refill but was surprised by the rush. “I heard there was some news about a fuel shortage. I just hope I am able to get fuel,” he said.

Pankaj Raval, who works in a photography studio, said he had heard that several pumps had already run dry. “There was news that there are fuel shortages. That’s why many people have come to fill up,” he said.

Several others echoed similar concerns, saying they rushed to petrol pumps after hearing that fuel supplies might run out soon.

Govt calls messages on fuel shortage ‘rumours’

Describing the messages on social media regarding shortage of petrol and diesel as “rumours”, Deputy Chief Minister Harsh Sanghavi clarified that enough stock of fuel is available in Gujarat and there is no need to panic. He said that Chief Minister Bhupendra Patel is holding a review meeting on the issue every alternate day.

In an official statement, Sanghavi said, “Enough stock of petrol and diesel is available in the state and so people need not do hoarding or panic.”

In the statement, Sanghavi also said that Chief Minister Bhupendra Patel has held a review meeting in the afternoon regarding fuel stock in the state.

“Continuous review is being taken to ensure that fuel is available at all the petrol pumps in the state. If there is any technical or other issue in the supply at any place, it will be immediately noted and resolved,” the Deputy CM said.

Quoting Sanghavi, the statement also stated that the administration has been alerted to take immediate steps on receiving any information related to fuel shortage or spreading rumours.

“The fuel system in the state is smooth and the administration has been keeping close eye on it,” it added.

Additional Chief Secretary Mona Khandhar, also assured that sufficient ‘buffer stock’ of fuel was available in the state. “The Oil companies have increased supply hours and also increased the quantity,” she said in a statement.

(With inputs from Parimal Dabhi, and Aryan Matthews)

(Aryan Matthews is an intern at The Indian Express, Ahmedabad)