The Government of India has made it official that petrol and diesel prices in India would now be changing on a daily basis. This dynamic pricing of petrol and diesel will start off from the 16th of June. The Minister of Petroleum and Natural Gas met with reps from ONGC, BPCL and HPCL on Wednesday, and they mutually agreed upon this pricing system. These three companies were invited as they are the three biggest names when it comes to fuel in India, holding over 95% market share.
This dynamic pricing for petrol and diesel prices was being tested for almost a year now. Last year, the government implemented this pricing strategy Puducherry, Vizag, Jamshedpur, Chandigarh and Udaipur. While the government has the approval of petrol pumps, one group of people dissatisfied with this move are the petroleum dealers.
The petroleum dealers are the people who actually manage the pumps. President of the petroleum dealers association said “We are not happy with implementation and logistics will be difficult. At midnight it takes a few hours to change the rate. During this time we have to keep our pumps closed.”
Dynamic Petrol and Diesel Prices in India: Effect on Consumers
However, everything eventually dials down to the consumer. Let us now take a look at how the consumers will be affected by this dynamically changing petrol price.
- Price fluctuations may affect daily prices of FMCG products
Considering that the prices of FMCG products are directly dependent upon the prices of petrol and diesel, daily fluctuations will indeed lead to a number of price changes. However, the pinch of this change would be felt by the wholesalers and bulk dealers, and not the end customer as the change would be in paisas.
- End of Petrol Politics
There has often been ‘politics over petrol’ played out in India. Government was often blamed for the hikes and praised for the drops. However, this dynamic pricing of petrol and diesel will now take the government out of the equation, and unless something goes horribly wrong, the government will not be at blame. This will also end malpractices like dropping prices before elections to lure voters.
- Benefits to oil marketing companies
While most of us will largely be unaffected by this change in the pricing mechanism, this would benefit the oil marketing companies as this would lead to decreased debts. They can also make profit out of this as the petrol prices may go up on some days and may remain down or stable on the others. While this would make book keeping a pain in the neck, it would be largely beneficial for the companies dealing with oil marketing.
This is a move that will bring in more transparency in the system, as well as ensure that the government stays out of the petrol politics. Stay tuned with us for more information on the story.