Govt extends USO to remote petrol pumps to rein in pvt fuel retailers

New Delhi: In a bid to rein in private fuel retailers curtailing operations to cut losses, the government has expanded the scope of Universal Service Obligation (USO), mandating licensed entities to maintain petrol and diesel sales at all petrol pumps, including in remote areas, for specified working hours.

"The government has now expanded the horizon of USO by including all retail outlets (petrol pumps) including remote area ROs under their ambit," the oil ministry said in a statement on Friday. After this, entities that have been granted licences to retail petrol and diesel will be "obligated to extend the USO to all the retail consumers at all the retail outlets." Failure to meet norms can lead to the cancellation of licences.

"This has been done with an objective to ensure a higher level of customer services in the market and to ensure that adherence to the USO forms a part of the market discipline," the ministry said. The move follows some petrol pumps operated by PSU firms in states like Madhya Pradesh, Rajasthan, Karnataka and Gujarat going out of stock following a sudden surge in demand.

This demand followed the curtailment of operations by private fuel retailers who could not compete with the heavily under-priced rates of public sector companies. With state-owned Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) selling petrol and diesel at rates that are Rs 15-25 a litre lower than the cost to keep the inflation under check, private fuel retailers like Jio-bp and Nayara Energy either raised prices at some locations or curtailed sales. State fuel retailers haven't changed retail prices since April 6 despite crude oil rates spiking to a decade high.

Stocks not available or being sold at higher rates, led to customers shifting from private outlets to PSUs who soon ran out of stocks, especially in hinterland locations where replenishing supplies takes time.

Now to ensure that private fuel retailers do not stop selling fuel, the government has amended the USO regulations.

The ministry said the government had relaxed the criteria for grant of authorization (licence) for marketing of transportation fuel (petrol and diesel) in November 2019 with an objective to ensure greater participation of the private sector.

"Simultaneously, it also ensured setting up retail outlets (ROs) in remote areas by these entities," the statement said.

It has been an endeavour of the government that for remote area ROs the authorized entities provide quality and uninterrupted fuel supply services to the consumers by way of USO, it said. These USOs include maintaining supplies of petrol and diesel throughout the specified working hours and of specified quality and quantity; making available minimum facilities as specified by the central government, the statement said.

Moreover, maintaining minimum inventory levels of petrol and diesel as specified by the Centre from time to time; providing services to any person on demand within a reasonable period of time and on a non-discriminatory basis and ensuring availability of fuel to the customers at reasonable prices, are also part of USOs.

These USOs, which previously did not apply to petrol pumps located in remote areas, have now been made universal and apply to all outlets. Following petrol pumps running dry, the govt had on June 15 stated that there were sufficient supplies of petrol and diesel to meet extra demand but admitted that the rush to PSU bunks was leading to delays and increased waiting time for customers.