Infrastructure Contractors Hit as Bulk Fuel Rates Higher Than Retail Price | Nagpur News

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Nagpur: Amid soaring fuel prices, contractors in the infrastructure sector are also obsessed with calculations when it comes to securing a price increase to offset rising costs.
Infrastructure contractors normally purchase fuel in bulk, as sites are located in remote locations and retail pumps are not available everywhere. These days, wholesale rates are higher than retail. In the case of diesel, which is the main fuel used to run vehicles on the venues, the difference can be as high as Rs 18 per litre. However, escalation due to rising costs is only available on a retail price basis as per contracts with government agencies and PSUs.
Retail diesel prices have not changed for nearly a fortnight. This means there is no escalation for contractors to compensate for rising fuel prices.
This year, when fuel prices have been high, wholesale prices are higher than retail prices. This happened for the first time, according to oil industry sources. In the normal course, wholesale rates should be lower than the retail price.
A source pointed out that when analyzing the rates for any tender, the rates of the nearest retail pump after deducting dealers’ commission are taken into account. Any increase in costs due to the increase in the price of diesel was automatically passed on. Now that retail rates are no longer raised at all, this has affected the margins of contractors who buy more expensive gasoline at wholesale rates.
Oil industry sources admit that this is the first time, at least in the recent past, that bulk prices have exceeded retail prices. Wholesale rates also apply to government agencies such as police and military.
However, the wholesale rates are the real fuel prices. Today, retail consumers continue to get “cheaper” fuel because wholesale rates are kept high.
Anand Sancheti of SMS Group, a major infrastructure company in the city, said contractors have been financially affected due to the situation. The matter was raised with government agencies but was denied a raise citing tender conditions.
He demanded that the government, as a special measure, allow a price increase based on actual prices in view of the extraordinary situation. A similar hike was allowed during the Gulf War when there was an extraordinary rise in the prices of petroleum products due to the conflict.
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