Why India is facing fuel shortage?
WHAT’S HAPPENING?
As oil marketing companies (OMCs) stare at huge under-recoveries, India is facing fuel shortage across the country with states like Rajasthan, Madhya Pradesh, Karnataka Uttarakhand, Gujarat and Haryana being the worst hit. There is a shortage of petrol and diesel in Rajasthan with over 2,000 fuel pumps running dry. In the capital city of Jaipur at least 100 stations have been hit, according to media reports.
WHAT IS LEADING TO THE SHORTAGE?
Petroleum dealers complain that Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL), the government-owned oil and gas producers, have restricted the supply of fuel. They are reportedly providing only 33% of the total demand, which is leading to a crisis. Private sector companies have reportedly stopped the sale of fuel at the pumps owned by them.
Rajasthan Petrol Dealers Association president Sunit Bagai told news agency IANS that the first major reason for this shortage is the closure of petrol pumps of Reliance and Essar for almost two weeks. He also said that the supply is being curtailed by BPCL and HPCL.
Rajasthan Petroleum Dealers Association has sent a letter to Petroleum Minister Hardeep Singh Puri, complaining about the paucity of supplies. While some petrol pumps have no fuel at all, at least 4,500 out of the 6,700 in the state are facing an acute shortage. Apart from Jaipur, the worst-hit cities are Jodhpur, Ajmer, and Kota.
WHY ARE SOME STATES MORE AFFECTED?
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. The comparatively higher dependence on private companies’ pumps has led to the shortage in the affected states, while other states have remained largely unaffected.
WHY HAS THE SUPPLY BEEN CURTAILED?
According to Bagai, the prices of crude oil have been going up in the international market, costing $120 per barrel. However, the government companies have not been able to increase their prices, as they have been stabilised by the Centre to curb inflation. In India, petrol and diesel prices have remained the same since 21 May, when the government announced a cut in excise duty.
This came as a much-needed relief for the public who was shelling out high prices in April and May, with petrol touching Rs 120 per litre in some cities and diesel crossing Rs 100. The prices in India have remained unchanged for close to three weeks now.
WHAT GOVT IS SAYING?
The government says users switching from them 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. The same period, last year, had seen very low demand due to covid-19. Pumps, however, say the main reason for the crisis is a shortfall in supply. Separately, farm demand for diesel is up as sowing starts.
IS IT A CAUSE FOR CONCERN?
It may not be a major cause for concern. The government has said that the country has adequate fuel to meet the rising energy demand in the country. India’s crude oil imports have also increased of late. However, a prolonged closure of the pumps of private fuel retailers may keep demand pressure high on the depots of state-run oil companies.
HOW LONG WILL THE DEMAND PRESSURE LAST?
Petrol pump associations said that the situation seems to be easing now as supplies turn up. However, normalcy across every region may take a bit of time. The pressure, however, is expected to last for the next 20 days till the kharif sowing ends.
WHAT IS BEING DONE?
The petroleum ministry said that 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.
Oil marketing companies have also made provisions for supply of more fuel in the affected states. The state-run oil marketing companies have assured adequate product availability and supplies