New Delhi: The government move to restrict diesel purchases through petrol pumps is raising concerns among hospitals, IT campuses, data centres and industrial facilities that rely heavily on diesel generators not only as emergency backup but also as a regular source of power during peak-demand periods.
Govt bars bulk purchases from retail outlets
The government on June 11 barred industrial, commercial and institutional consumers from purchasing diesel at petrol pumps and limited sales through retail outlets to 200 litres per customer or vehicle per day, a move aimed at conserving supplies and preventing diversion of fuel meant for retail consumers.
Industry executives said the restrictions could disrupt fuel procurement for sectors where diesel generators remain critical to operations.
Hospitals are among most vulnerable
Hospitals are among the most vulnerable. Large healthcare facilities typically maintain multiple diesel generator sets capable of powering entire campuses during grid disruptions and often run them proactively during surgeries, intensive-care operations and other critical procedures where even momentary voltage fluctuations can pose risks to patients.
“Many hospitals do not depend exclusively on grid electricity for critical functions. Diesel generators are an integral part of operational planning because uninterrupted power is non-negotiable,” said an executive at a hospital chain.
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Effect on data centres, IT parks
Data centres, IT parks and telecom facilities also rely extensively on diesel-based backup systems to meet uptime commitments. Industry officials said many facilities routinely top up diesel inventories from nearby fuel stations to ensure uninterrupted operations.
“Peak hour power tariffs in some states are higher than the cost of generating electricity using diesel gensets. And so many IT companies rely on diesel gensets to meet power demand during peak hours,” another industry executive said.
Operating costs could go up
The restrictions could also increase operating costs for some industrial and commercial consumers. During periods of peak electricity demand, power purchased from the grid can become significantly more expensive than captive diesel generation, prompting some facilities to switch part of their load to generator sets to manage costs and maintain reliability.
The government said the measures were prompted by “abnormal increases” in diesel and petrol sales at retail outlets as industrial and institutional consumers shifted purchases from bulk supply channels to lower-priced retail pumps, creating risks of local shortages.
Under the order, such consumers will be required to source fuel through dedicated consumer pumps and bulk supply arrangements rather than retail outlets.
Industry seeks exemptions to essential services
Industry representatives are seeking exemptions and operational clarifications for essential services, arguing that hospitals, telecom networks, data centres and other critical infrastructure require assured access to diesel supplies regardless of prevailing market conditions.
Executives said organisations with established bulk fuel contracts are likely to face limited disruption, but institutions dependent on flexible retail purchases may need to rapidly overhaul procurement practices if the restrictions are activated.
The restrictions, which will be in place for up to 90 days, follow abnormal demand growth, particularly that of diesel, in some pockets after bulk users started buying fuel from petrol pumps due to the pricing difference. While diesel at petrol pumps costs Rs 95.20 a litre in Delhi, bulk sales are priced at Rs 134.50.
The differential arose as state-owned oil companies modulated retail prices to insulate common users from the spike in cost that followed the West Asia crisis in late February. While bulk users such as telecom towers and industries using diesel for power generation and other feedstock needs are charged market price, the retail pump rates are way lower than cost.
Commercial customers like trucking companies and state road transport buses too had been tapping pumps for their needs, resulting in an abnormal rise in demand in some pockets.
The price differential has also led to a shift in sales pattern with volumes shifting to PSU petrol pumps from private sector outlets that priced petrol and diesel at higher rates.
In May, three state-owned firms, IOC, BPCL, and HPCL saw a 4.8 per cent jump in petrol sales and 6.4 per cent surge in diesel.
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