Oil Companies Raise Dealer Margins; Here’s What It Means For Fuel Prices

Oil marketing companies (OMCs) announced on Tuesday an increase in dealer commissions for fuel pump operators and adjustments to inter-state freight charges, targeting a decrease in petrol and diesel prices across multiple regions of India. The change comes with a focus on stabilizing retail fuel costs and minimizing price disparities within states.

Indian Oil Corporation (IOC) confirmed a revision in dealer margins effective October 30, 2024. Following the resolution of an ongoing legal matter, this change is designed to support improved customer service and the well-being of retail staff. The corporation emphasized that this adjustment will not raise retail fuel prices. “Indian Oil is pleased to announce a revision in dealer margins…to enhance our commitment to superior customer service and the welfare of retail outlet staff,” IOC shared in a statement on X (formerly Twitter).

IOC also announced a plan to reduce price variations by implementing inter-state freight rationalization, aligning prices within states with few exceptions. The move excludes areas where the model code of conduct currently applies, such as election-bound regions. “Our mission to offer affordable fuel across India is coming to fruition,” IOC stated, highlighting that this price adjustment effort will result in fewer retail price differences within states.

Support From The Ministry Of Petroleum And Natural Gas

Union Petroleum and Natural Gas Minister Hardeep Singh Puri voiced support for the OMCs’ decisions, noting how the increase in dealer commissions and the freight rationalization policy will benefit consumers in remote areas, distant from main fuel depots. He remarked that this decision aligns with Prime Minister Narendra Modi’s vision of providing accessible facilities across all regions, including India’s Northeast, which has seen substantial improvements in connectivity and infrastructure.

Puri added that the commission increase will enhance services for approximately seven crore customers who visit fuel stations daily, ensuring improved access without any hike in fuel prices. This change is expected to positively impact both the customer experience and service quality across the nation, reflecting the government’s commitment to expanding benefits to all citizens.

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