Petrol pump dealers across the country have locked horns with the oil marketing companies saying they have been forced to sell premium fuels, despite consumers demanding the less expensive normal petrol and diesel.

"We have been forced to sell premium fuels by the companies. The supply of normal fuel has reduced and when customers demand fuels we are unable to supply it," said Ajay Bansal, general secretary of the Federation of All India Petroleum Traders, the organisation which has 37,000 petrol pump dealers across the country.

The dealers claim that the oil marketing companies -- Indian Oil Corporation [Get Quote], Bharat Petroleum Corporation [Get Quote] and Hindustan Petroleum Corporation [Get Quote] -- are rationing normal petrol and diesel to their retail outlets. As a result, premium fuels make up almost 50 per cent of the sales of the 410 outlets in Delhi.

Oil companies add certain additives to normal petrol and diesel that offer better performance of vehicle engines. Prices of premium petrol and diesel are not regulated by the government, the way normal petrol and diesel are.

The price of premium petrol is around Rs 4 per litre higher than normal petrol, while the premium diesel is around Rs 2.50 per litre more expensive. IOC, BPCL and HPCL can reduce their under-realisation on petrol and diesel sales if they sell more premium fuels.

The petroleum traders' association recently met Petroleum Minister Murli Deora asking him to lay out a formal policy for sale of premium and normal fuels.

"Why should we have to answer consumers who want to buy normal petrol and diesel supply which is now rationed?" Bansal asked.

The oil marketing companies, however, say they are not rationing supply of normal fuels and forcing consumers to buy the more expensive premium fuels. "We are only encouraging the dealers to sell branded fuels," said a top official with BPCL, which sells a quarter of the fuels the country consumes.

The oil companies say that the demand for premium fuels is increasing and so it makes sense for them to sell more premium fuels. "The demand for premium fuels is growing even in rural areas," an IOC spokesperson said.

The share of premium petrol and diesel in the oil companies' total sale of petrol and diesel has gone up from around 12 per cent in 2006 to 23 per cent in 2007, and nearly 38 per cent now.

Analysts, however, say that the rise in demand for premium fuels could be because the consumer is being given no other option but to buy the more expensive fuel.

The petrol pump dealers are not yet softening in their stance against 'forceful' selling of premium fuels. 

"Following the petroleum minister's advice, we are going to meet the marketing directors of IOC, BPCL and HPCL, and work out a strategy. If nothing comes out of it, we will go on strike," Bansal threatened.

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