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Petrol pumps in remote areas brought under universal service obligation

Now, with this move the government has made it obligatory for the oil marketing companies (OMC) to provide supply to retail pumps across the country.Premium
Now, with this move the government has made it obligatory for the oil marketing companies (OMC) to provide supply to retail pumps across the country.

  • The move comes on the backdrop of shortage of petrol and diesel in several states including Rajasthan, Madhya Pradesh, Gujarat, Tamil Nadu and instances of long queues at petrol pumps and anxiety among the public.

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New Delhi: In a bid to ensure uninterrupted fuel supply in the country, Centre has expanded the ambit of the universal services obligation (USO) to include all retail fuel outlets across the country along with those in remote areas.

The move comes on the backdrop of shortage of petrol and diesel in several states including Rajasthan, Madhya Pradesh, Gujarat, Tamil Nadu and instances of long queues at petrol pumps and anxiety among the public.

“This has been done with an objective to ensure higher level of customer services in the market and to ensure that adherence to the USO forms a part of the market discipline," said a statement from the ministry of petroleum and natural gas.

According to the government, the recent shortage in several states and the eventual panic among consumers has occurred as several the pumps of private OMCs have either shut or curtailed sales amid high crude oil prices. This has resulted in a heavy demand across the pumps of state-rum OMCs causing concerns of shortfall of supplies at these pumps.

Now, with this move the government has made it obligatory for the oil marketing companies (OMC) to provide supply to retail pumps across the country.

As per the USO, pumps will have to maintain supplies of petrol and diesel throughout the “specified working hours and of specified quality and quantity".

They will have to maintain minimum inventory levels of the fuels as specified by the centre from time to time, providing services to any person on demand within a reasonable period of time and on non-discriminatory basis and ensuring availability of fuel to the customers at reasonable prices, the ministry statement said.

Even though crude oil prices have crossed $120 per barrel, retail prices have not kept pace, affecting the financials of oil marketing companies and with this private players have largely stopped selling fuel.

A statement from the government on Wednesday, said that consumers switching from depots of private OMCs to to state-run retailers has boosted demand, causing a temporary logistics issue. The oil ministry has also attributed the surge to a 50% year-on-year growth in demand in June.

Further, farm demand for diesel has risen as sowing starts adding to the demand surge.

States which have been worst-affected by the shortage are the ones with a heavy dependence on the pumps of private companies, which have shut or reduced fuel sales. In Rajasthan, fuel retail outlets run by private companies cater to 15-17% of the fuel demand. Out of the 6,475 pumps in the state, 1,275 belong to private companies. Similarly, private companies own 500 out of the total 4,900 pumps in Madhya Pradesh.

According to the government oil companies have geared up to tackle these issues by increasing stocks at depots and terminals. They have deployed more trucks to serve retail outlets and depots, and terminals have resorted to extended working hours including at night to cater to the extra demand according to the petroleum ministry.

The state-run oil marketing companies have also assured adequate product availability and supplies across their networks.

According to petrol pump associations situation seems to be easing now as supplies turn up. However, normalcy across every region may take a bit of time. President of Madhya Pradesh Petrol Pump Dealer Association, Ajay Singh said that the pressure, is likely to continue for the next 20 days till the kharif sowing ends.-

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