Indian Oil Companies Restrict Advance Payments Amid Global Supply Concerns

Fuel Supply Chain Disruptions in India: State-Run Oil Marketing Companies Tighten Payment Terms

Key Developments:

• Hindustan Petroleum Corp. Ltd (HPCL) and Bharat Petroleum Corp. Ltd (BPCL) began insisting on advance payments from retail outlets last week.
• Indian Oil Corp. Ltd (IOCL) halted its five-day revolving credit policy on Monday, effective immediately.
• These changes mark a shift from the earlier system that allowed dealers short-term credit to procure fuel.

Impact on Fuel Supply Chain:

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• The three state-run oil marketing companies (OMCs) - HPCL, BPCL, and IOCL - supply the majority of India's nearly 100,000 petrol pumps.
• The decision comes at a time when the West Asia conflict has disrupted about 40% of India's crude supply routes.
• Petro-product demand in India is projected to reach 250.8 million tonnes by FY27.

Potential Disruptions:

• Apart from retail outlets, bulk buyers in agriculture, transport, and industry, who rely on credit, could also face disruptions.
• The Consortium of Indian Petroleum Dealers (CIPD), which represents about 30,000 petrol pumps across the country, has confirmed the development.

Government Response:

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• The Union petroleum ministry and the oil marketing companies did not respond to queries from Mint.
• However, in a statement on Sunday, the petroleum ministry said refineries are operating at high capacity and maintaining adequate crude inventories.
• The ministry stated that the country remains self-sufficient in petrol and diesel production, with no imports required to meet domestic demand.