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Prices may differ soon at every fuel station

Soon, you may want to keep an eye on how petrol is priced at various fuel stations in your neighbourhood. Anupama Airy and Mahua Venkatesh reports.

business Updated: Jan 28, 2013 01:05 IST

Soon, you may want to keep an eye on how petrol is priced at various fuel stations in your neighbourhood.

If the country's competition watchdog has its way, the three state-run companies, which sell the fuel at almost the same price, may soon be competing against each other to woo customers.

“A fair competition between the three oil firms should benefit consumers and we need to understand how the quantum and timing of hikes are the same. Ideally, they should vary depending on their cost of operation,” said a CCI official, who did not wish to be identified.

Fearing that Indian Oil, Hindustan Petroleum and Bharat Petroleum are not allowing fair pricing, the Competition Commission of India (CCI) plans to send notices to these firms within a fortnight on their pricing models.

“How is it that even the logistics cost of carrying petrol from refinery to pumps is also the same in case of all the three firms...,” the official said.

As against the present practice of uniform rates at all fuel stations, competition among the companies retailing fuel can bring down prices — as it happens overseas, where charges vary from one outlet to the other.

Though the government recently allowed small periodical hikes in diesel prices, seen as a step towards deregulation, it is the pricing of petrol, which is in sync with global market, that the CCI is closely watching.

“We have now decided to investigate the firms directly on pricing of petrol as we feel there could be a cartel at work,” the official said.

The anti-trust body wants to know how and why the companies increase the prices at almost the same time, with little difference in the quantum of hike.

Typically, the price difference does not exceed 2 paise a litre and the oil companies hike the prices within a week of each other.

In the reply to a letter from the watchdog, the petroleum ministry said the government had no role in fixing the prices, the official said.

In most overseas countries, retailers sell fuel at different prices and the prices change almost daily. Absence of private sector retailers in India is preventing such a competition.

The deregulation of petrol and the intent to increase diesel prices in phases is expected to reopen the sector for private players -- a move that will force state firms to give discounts to consumers in line with the market forces.