Lower petrol prices draw Delhi commuters to NCR cities

According to petrol pump dealers around the border areas in Delhi, the drop in sales in these stations is around 25% since Friday. They said that vends within the city may also start feeling the pinch soon.

Petrol costs ₹103.97 a litre in Delhi, but only ₹95.51 a litre in Noida, and ₹95.90 a litre in Gurugram. Expectedly, petrol filling stations near the borders of the national capital have already begun losing customers to filling stations in these satellite cities that are in neighbouring states, the first in Uttar Pradesh, and the second in Haryana.

Delhi chief minister Arvind Kejriwal. (HT_PRINT)

According to petrol pump dealers, the drop in sales in these stations is around 25% (since Friday), and people in the business say it is only a matter of time before even filling stations well within the city start feeling the pinch. “The gain of ₹8 per litre is not small for consumers and average radius of Delhi is 15km,” said Nischal Singhania, a Delhi-based fuel dealer and spokesperson of the Delhi Petrol Dealers Association (DPDA).

Many people who live in Delhi work in the satellite towns of Ghaziabad, Faridabad, Gurugram, and Noida, and it is likely they will fill up fuel on their commute up or down. And many others live in these satellite towns and work in Delhi -- and will likely be very conscious about not fuelling up in the Capital, something they may have not worried about in the past.

“For any consumer, it’s worth driving a few kilometers to save about ₹250 to get the tank full. As I live in Delhi and Work in Gurgaon, this saving comes to me naturally,” said Esha Pruthi, who works in an MNC in Gurugram.

Already, longer-than-usual queues are visible in filling stations in the satellite towns near the border with the Capital, although none of the outlets is, as yet, advertising the significant price difference.

“Petrol and diesel rates are quite high, and also vary from city to city. States compete with each other to regulate the prices and the common man suffers in this. Ideally, fuel rates across the country should be made uniform to avoid any hassle to the consumer,” said chartered accountant Tarun Kumar, who lives in the east Delhi, which is close to the UP border.

Delhi consumes around 2.67 million litres of petrol and 1.67 million litres of diesel a day on average .

To be sure, this applies only for petrol. There is only a marginal difference in the price of diesel (which is actually lower in Delhi than in Gurugram and Noida, albeit by a few paise).

After the Union government slashed central excise duty on petrol and diesel by ₹5 per and ₹10 per litre effectively on November 5, several states, including Uttar Pradesh and Haryana, reduced value-added tax (VAT). State levies in Delhi, however, remained unchanged at 30% on petrol and 16.75% on diesel. Pump prices of petrol and diesel differ from place to place because of central and state levies, and transportation surcharges.

The difference is “because of high VAT rates in Delhi,” Singhania said. “While petrol pump dealers are losing sales, the state government is losing revenue to the neighbouring states. We have requested the Delhi government to reduce taxes immediately as several pumps at the border are on the verge of closure.”

Delhi filling stations are also losing on diesel sales to neighbouring Punjab, the key supplier of fresh fruits, vegetables, milk and poultry products to the national capital, because of a significant difference in the fuel rates. Diesel costs only ₹84.26 a litre in Ludhiana (Punjab) and ₹80.90 in Chandigarh, compared to ₹86.67 in Delhi.

“Trucks carrying daily supplies of fruits, vegetable and paper now prefer to fill tanks in neighbouring states where diesel is cheaper, which is affecting our sales, and thereby state’s revenue. Reduction in VAT rates to align them with neighbouring states is prudent for both [Delhi-based pumps and the state government],” Singhania said.

In a representation to the Delhi government on November 7, DPDA president Anurag Narain said due to high tax rates, average monthly petrol sales in the capital has gone down from 110 million litres in 2014 to 80 million litres now and diesel from 130 million litres in 2014 to 50 million litres.

According to energy experts, the tax differential is one of the key reasons as petrol and diesel are highly price sensitive products. Besides, people are moving away from fossil fuels to cheaper and cleaner options such as compressed natural gas (CNG) and electrical vehicles (EVs). Most of the taxis, particularly app-based mobility options, which are quite popular in the Capital, are mainly CNG based.