Petrol Pump Operators Urge Oil Ministry to Revise Dealer Margins Amid Rising Operating Costs

Petrol pump operators have formally requested the Oil Ministry to review and revise the dealer margins paid by oil marketing companies (OMCs). The Federation of All India Petroleum Traders (FAIPT) addressed a letter to Oil Secretary Neeraj Mittal, seeking his immediate intervention to address the financial concerns of petroleum dealers.

FAIPT President Ashok Badhwar stated that petroleum dealers are seeking a fair reimbursement of legitimate operating costs and a reasonable return on capital. This is necessary to maintain uninterrupted service and emergency services across the country. Dealer margins were last increased significantly in 2017, followed by a marginal increase in October 2024 after the settlement of the Marketing Discipline Guidelines (MDG), which governs operations, service standards, and penalties between public sector OMCs and retail outlets.

Monty Sehgal, FAIPT’s national spokesperson, noted that input costs have increased drastically since 2020 due to higher fuel prices, while the inflation component has largely been ignored by OMCs. According to the federation, petroleum dealers are operating under severe financial stress driven by increased inventory costs and squeezing volumes.

Badhwar highlighted that the meagre dealer margin hike granted in October 2024 came after a gap of seven years and ignored the inflation index amid changing market conditions between 2018 and 2024. Dealers feel that the assurances made during the MDG deadlock resolution regarding regular interval hikes have not been honored.

The federation pointed out that for a standard retail outlet selling 170 kiloliters per month, the net business return is approximately ₹37,500 monthly after meeting operational costs. Furthermore, over 80 percent of retail outlets in the country operate at sales of less than 100 kiloliters per month. FAIPT has requested the corporate management of OMCs to evaluate a uniform remuneration of ₹2 lakh per month to ensure financial stability.

Another major concern raised by the federation is the rising expenditure on staff salaries. Various state governments have revised wages since the last dealer margin hike, and these updates need to be factored in to accommodate three-shift operations. Under the New Labour Code, employees can work strictly up to 8 hours per shift, making current margins inadequate for multiple shifts. The dealers have urged the ministry to direct OMCs to restructure the salary component within the dealer margin framework to align with statutory shift realities.

"Retail petroleum operations are facing a margin squeeze due to a prolonged gap in revisions and rising fixed operational expenses like inventory and labor costs. When operating costs outpace remuneration over a multi-year period, it impacts the financial viability of small business owners running these outlets. Addressing structural cost components, such as statutory wage revisions and realistic inventory expenses, is essential for maintaining the health of the retail distribution network." — Dr. Shishir Gupta, Founder & CEO, StartupLanes