[Nalin1]

Originally Posted by NiXTriX2004

How will the common man learn about the prices that are in effect? Currently, since the change is every fortnight, the newspapers or tv channels report on it. However, I do not think that will continue if it is changing daily. Only the newspapers might have a small box hidden away some place.

Will the oil companies publish a list or something on their website?

I have been using this one for some time now. It is very accurate-

http://www.mypetrolprice.com/

[King_pin09]

Originally Posted by dass

This is a very interesting move. This will also ensure that fuel cuts (and raises) are passed on almost immediately and not after the event has occurred. Not sure, how the calibration of the fuel pumps for the new prices will happen so frequently. Are they even equipped to manage this much fluctuation?

Sir, since 2015 the crude oil prices fell down globally. Ideally the fuel prices in our country should have also gone down considerably. However the Government 'absorbed' its impact by increasing the taxes and ensured that the poor customer is kept at the same status of financial burden.

Originally Posted by car_crazy1400

I just want to ask a simple question.

Suppose I am a fuel retailer and bought diesel to resell at 60/litre.

Now, after a couple of hours, if the prices go down to say 55.50, would the retailer be reimbursed by the OMC's?

Simple answer, retailer will close the shop for next 3-4 hours claiming "gone for lunch" or "fuel out of stock", and re-open only when the prices will rise higher.

Originally Posted by abhishek46

If the prices are going to change daily, how will the customers know if they are being charged correct rate or not at the fuel pump?

There should be some portal or something where the rates should be updated then on daily basis for each region/state.

Sir, even if the Government starts up such a portal; even then the live information will be displayed in a very ambiguous manner so that the customer will never be able to determine the actual retail price in his area. He will, in every which way, be left unequivocally at the mercy of the retailer lobby.

[WhiteFang]

Originally Posted by King_pin09

Sir, since 2015 the crude oil prices fell down globally. Ideally the fuel prices in our country should have also gone down considerably. However the Government 'absorbed' its impact by increasing the taxes and ensured that the poor customer is kept at the same status of financial burden.

I guess it was not just from government side, PSU Oil companies collectively took this decision not to pass on all the benefits to customers. It is understandable as these companies have taken a big hit on their financials during the days of government regularised fuel pricing. There is nothing wrong in getting back to profit and strengthing their financials. The result of above can be clearly seen in their balance sheet pertaining to last couple of years.

[dailydriver]

While the society is trying to come to terms with the implications of daily revision of fuel prices, the petroleum dealers too seem to be inconvenienced a lot because of this change. As usual, they have threatened to shut shop on June 16 to register their protest. An interesting spin off of the proposed measure has been captured in today's Deccan Herald.

Quoting a few lines:

H S Manjappa, president, Karnataka State Federation of Petroleum Dealers Federation, said daily revision of fuel prices would pose many challenges. "The revision should take place exactly at 11.59 pm,” he said. "And we have to update the petroleum companies about stocks by 6 am.” Only owners know the password to effect price revision now, he explained.

"They can’t share the secret code with their workers, most of whom are not permanent. The owner has to be present at the outlet at 12 midnight and again wake up well before 6 am to send updates to the oil companies,” he said. This means dealers would go without sleep. "It will ruin our personal lives,” Manjappa said.

[Dr.Vikas]

As a recent & also an expected development in the context, Petrol Dealers pan India are about to protest the decision. Associations have threatened to observe an indefinite STRIKE from 24th June..
Reasons well explained in the letter to Sh Dharmendra Pradhan, Cabinet Minister, MoPNG.

[S.MJet]

Originally Posted by Dr.Vikas

As a recent & also an expected development in the context, Petrol Dealers pan India are about to protest the decision. Associations have threatened to observe an indefinite STRIKE from 24th June..

Now they have changed their way to protest, they will adopt 'no purchase' from OMCs from 16th June and soon will go dry.

Protesting against the government's decision to revise petrol and diesel prices daily for consumers across the country from June 16, petrol pump owners in India have decided not to purchase fuel from OMCs.

I guess they used to make money by managing stock anticipating price changes every 15 days which they will not be able to do now.

The dealers were worried because of the declining stock value and demanded an increase in dealer commission, which is 2-3%. According to sources, oil marketing companies are likely to take a call on dealer commission by June 30.

Source: ET

[blackasta]

Daily fuel price changes have been happening in USA and other European countries for years now.
Are all the fuel dealers insomniacs in those places?
There must be some process they follow in those countries which can be picked up by the govt / pump owners in India.
I refuse to believe that India can match the first world countries in rocket science and not have a solution to this simple problem.

[condor]

Originally Posted by blackasta

Daily fuel price changes have been happening in USA and other European countries for years now.
Are all the fuel dealers insomniacs in those places?.

Part of the problem is the margins they make. Fill up to capacity before a price hike, push it with limited quantities before a drop.

[aplang1]

I applaud the government and the ministry to have thought of this project but at the same time I would say that the implementation is utterly ridiculous. It is another hair-brained scheme of some babu sitting somewhere who wants his 15 minutes of fame. I can assure you guys it will be an absolute disaster.

Now let's address the concerns raised by the forum members one by one:

1. Firstly, it is true that the dealers stock up before a price hike and derive benefit. But accusing them of profiteering is grossly incorrect, for the simple reason that when prices are revised downwards, the dealer incurs losses as well. It is no surprise that the profits and losses get nullified.

2. Secondly, the country lacks basic infrastructure to support the implementation of the project. Close to 50 percent of the total fuel stations are not automated. What this means is, that once new prices are received by the dealer at midnight (Normally they come out at 1am in the morning), the price on each 'meter' on every dispensing unit needs to changed manually (more the number of dispensers/nozzles, more the work involved). The process involves entering a 'password' into the dispenser interface (before new price is entered), which is normally 4 digits and is ideally only known to the dealer or maybe a senior manager. This system is in place so that employees do not cheat the customers (by changing prices) in the absence of the owner. No dealer shall stay up till 1 am each night to do this task manually, let's get real here guys.

3. Thirdly, let us say the system is introduced. Where is the enforcement mechanism to make sure the prices are reflected accurately on a daily basis. We are all aware of what is the speed of flow of information between various government agencies in India. By the time the OMC responds to the requests of the Food & Supplies Deptt officer regarding the price for the day (so that he can verify if the dealer is cheating or not), it would already be 2-3 days.

4. Yes India can match the west in rocket science, but that is not the correct analogy. We are comparing 53000 dealers to a dedicated space research organisation. Different motivations basically. To answer the fact that the Western world can do it and we can't - Well most fuel stations in the west are being supplied using underground pipelines, and the dealer is paid a commission basis each gallon sold. That covers his expenses and the money left over is his profit. In our case, it is the average dealer paying up first to the OMC at the beginning of the day, then receiving stock by evening, and then selling it in the evening or next day. Assuming a few paisa downward revision and a dealer who has high sales, this is OK, since effect is minimal (stock will be sold by next day anyways). But let's think of the suburban and rural dealer (and mind you, there are loads of them). If he sells one tanker load over 10 days and there is downward revision, his working capital is indeed going to be finished.

5. This will give rise to rampant smuggling as long as GST is not introduced, dealers will try to offset losses against differential pricing across the state border.

Now, someone might argue with the following two arguments:

A/ The dealers will make money on upward revision too, so what is the issue?
Think of it this way, the dealers know that is the industry is going to die a slow death. Crude prices are slowly going to keep going down and it will eventually wipe out their working capitals sooner or later. No one wants to watch their money burn like that.

B/ The dealers have had a good time all these years and amassed enough wealth, and all industries have life cycles, so what is the big deal?
Well it isn't the big dealers who are affected so much as the smaller ones. For few, it is a source of livelihood. They'd rather not sell, than sell and watch their invested capital get destroyed.

I am open to discuss this topic further. Again, to reiterate, I applaud the move, but could have been rolled out in a better manner.

P.S. Someone also mentioned that the government isn't passing on the benefit of low crude prices to the end consumer. I honestly don't see an issue with that. It is a matter of trusting the government to putting that revenue to good use.

[ksameer1234]

Originally Posted by Dr.Vikas

As a recent & also an expected development in the context, Petrol Dealers pan India are about to protest the decision.

The reasoning of dealers seems to be based on assumption that fuel prices are going to see downward revision in which case dealers would see losses. Why not also talk about profits when price see upward revision?

If anything, rather than experiencing a shock of 2-3 rupees every 15 days, it is better to manage revisions of few paisa daily. This would in fact hedge the potential losses for dealers. Unless dealers are practicing hoarding fuel when they know that prices are going to increase in a few days!

Originally Posted by aplang1

it is true that the dealers stock up before a price hike and derive benefit. But accusing them of profiteering is grossly incorrect, for the simple reason that when prices are revised downwards, the dealer incurs losses as well.

I don’t suppose dealers are naive enough to stock up full knowing that fuel prices are going to go down.

Close to 50 percent of the total fuel stations are not automated.

I could only find a 2 year old news article but it says that over 50% IOCL outlets would be automated by end of 2015. I suppose it would have only increased since then.

No dealer shall stay up till 1 am each night to do this task manually, let's get real here guys.

The prices can be revised first thing in the morning when pump starts operation.

dealers know that is the industry is going to die a slow death.

I guess that’s a fair-enough business risk. However considering the rapid urbanization in India, I don’t see pump dealers shutting shop due to losses anytime soon. In Pune, I doubt if pump operators even get sufficient loo breaks, serpentine queues notwithstanding.

For few, it is a source of livelihood. They'd rather not sell, than sell and watch their invested capital get destroyed.

I have heard stories few years ago of how it takes to be a big-shot in the city to land up pump dealership. Has the scenario changed so drastically?

[aplang1]

Originally Posted by ksameer1234

I don’t suppose dealers are naive enough to stock up full knowing that fuel prices are going to go down.

The dealers aren't economists who can predict price movement on a daily basis. The fuel price hike or reduction is not informed to the dealer till the very last moment. Nevertheless, I know of dealers who follow the news and global trends and therefore have upto 90-95 percent correct prediction rate on which way is the price going to move. But once again, I would urge you to not think of the typical city dealer, but think of the one's operating fuel stations under the defence martyr quota etc. I have seen them suffer a lot.

Originally Posted by ksameer1234

I could only find a 2 year old news article but it says that over 50% IOCL outlets would be automated by end of 2015. I suppose it would have only increased since then.

Thank you for the article. Much appreciated. I would like to say that Automation installation and a correctly working Automation are way different things. Also, the current Automation is dealer level Automation, and not at the company level. So the company still cannot change the prices at the back end. This essentially means that the dealer still needs to share his password with the employees. Problem still remains.

Originally Posted by ksameer1234

The prices can be revised first thing in the morning when pump starts operation.

Prices change needs to be followed by recording of stock levels and also the meter readings on each individual nozzle.

Stock level is measured using a dip road which is smeared with a dye. The corresponding level of fuel then shows up as a mark on the dip rod. Next is the water check. Again a dye is smeared to the bottom of the dip rod and inserted into the tank to check for inadvertent accumulation of water (due to the stupid idea of ethanol blended fuel that is sold in the country). The process is repeated for each underground tank.

Meter readings are noted from a small meter under the nozzle. These are required by law to calculate how many litres were sold at the previous rate.

These processes take a long time.

I agree that maybe the fuel stations that shut down in the night and open in the morning can do the same at like 5am, but 24 hour stations cannot stop dispensing fuel and ask customers to wait.

Originally Posted by ksameer1234

I guess that’s a fair-enough business risk. However considering the rapid urbanization in India, I don’t see pump dealers shutting shop due to losses anytime soon. In Pune, I doubt if pump operators even get sufficient loo breaks, serpentine queues notwithstanding.

Yes, very well pointed out. But industry declines right after it peaks. And we needn't think in the context of the typical city dealer, they will be ok. If you read the letter sent to the ministry, major concern is that of the smaller dealer.

Originally Posted by ksameer1234

I have heard stories few years ago of how it takes to be a big-shot in the city to land up pump dealership. Has the scenario changed so drastically?

Times indeed have changed, OMCs have become smarter now. Earlier there was single contract with the 'big-shot' dealer which included leasing of his land and also awarding him dealership, renewed every ten years. They realised that if the dealer was unscrupulous, they couldn't touch him due to the so called 'connections'. Even if they could (say the govt changed), they would lose the prime location dealership. This would hit sales and therefore they let the dealer be.

Now, there are two contracts for all new dealers. One for 99 year leasing of land (read the doc, it is completely one sided) and the other for dealership. If the dealer messes around, out he goes, while land still stays with the OMC. They can appoint new dealer on site and the earlier dealer, the so called big shot can watch someone else use his land to make money is a prime location. It isn't the most pleasing sight.

Therefore, the one's entering the business now are extremely wary. This issue coupled with the ever growing manpower problem in the country, most don't want another dealership. And Good Luck fighting an OMC in court to get your land back. It is going to take years.

Cheers!

[embee]

How are OMCs gearing up?

Daily price revision is an international practice. Oil companies said it will make retail prices more reflective of the current market conditions and will increase transparency in the system.

Three major oil retailers - Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation - operate 90 percent of the retail outlets in the country,

IOC has 10,000 automated fuel stations that update the price on a daily basis at midnight.

At the non-automated petrol pumps, dealers would get the updated price by way of four distinct means including customised SMSes, e-mails, a mobile app and a web portal for dealers. IOC also plans to provide training to employees at the retail stations to ease the transition.

The decision by state-owned oil companies to revise fuel prices daily from June 16 is not going down well with retailers, with inventory and automation among their primary concerns.

Another grievance is inventory. Earlier, retailers used to anticipate the price changes and stock their inventory accordingly. With the switch to daily pricing, retailers are also anxious about the margins that could be lost on their current inventories.

Retailers are also worried about the sentiment-driven price spikes that would occur due to international events of a geopolitical nature. Such spikes were ironed out during fortnightly price revisions.

http://www.moneycontrol.com/news/bus...s-2302081.html

http://www.livemint.com/Industry/qTZ...-rings-in.html

[dailydriver]

Originally Posted by NiXTriX2004

Will the oil companies publish a list or something on their website?

Indian Oil Corporation will come up with a mobile app called Fuel@IOC which will enable consumers to stay informed about the daily prices. Prices can also be crosschecked by sending an SMS, `RSP DEALER CODE' to 92249-92249.

It is only a matter of time before the the other two oil PSU's follow suit.

Source

[condor]

It is also possible that dealers will ask for a higher commission to off-set their loss of profits (how ever little) that they are making now before a price hike.

[noopster]

From purely a consumer point of view this move is utter stupidity. Daily changing prices means that there is no way I can be sure of the price at any given point in time when I visit the fuel station for a top-up. That means an unscrupulous dealer can potentially jack up prices- even marginally- and make a killing. Worse, he can plead ignorance afterwards and get away with it.