Pandian intervenes in CNG dealer strikes

Vol 14, PW 26 (30 Jun 11) Midstream & Downstream

Gujarat chief minister Narendra Modi’s CNG promotion drive in Gujarat (above) comes amid the threat of state-wide strikes by CNG dealers working with IndianOil, Bharat Petroleum and Hindustan Petroleum.

Gujarat energy secretary DJ Pandian met officials from all three state-owned companies on June 22 in Gandhinagar, including IOC chief manager (retail sales) A. Mazumdar, IOC deputy general manager (retail development) MD Kumar and HPCL chief manager (natural gas) SK Hazra.

Days earlier on June 15, Pandian met a disgruntled delegation from industry lobby group Federation of Petroleum Dealers’ Association (FPDA), consisting of its president Kiran Patel and its secretary Arvind Thakkar. “The dealers have agreed not to call any more strikes,” says Pandian.

“I am hammering out a solution with the OMCs (oil marketing companies).” Pandian is concerned because Gujarat-owned gas retailer GSPC Gas is unwittingly caught in the crossfire between the dealers and the OMCs.

GSPC Gas sells CNG from dispensers at 88 petrol and diesel retail stations in Gujarat, owned by IOC, BPCL and HPCL. This arrangement saves GSPC money as it can bypass the headache of acquiring land to set up its own ‘stand-alone’ CNG stations.

But local dealers, who operate these CNG dispensers went on strike on June 1 because they were unhappy with the commissions they were receiving for their services from IOC, BPCL and HPCL. Until May 25 this year, GSPC Gas was paying a fixed commission of Rs1/kg ($0.02) to IOC, BPCL and HPCL on any CNG sold.

Of this commission, 57% went to the dealers while the state-owned companies swallowed 43%. Since May 25, GSPC Gas is paying Rs1.45/kg ($0.03) as commission but the dealers’ share of this has decreased to 50%, leading to the protests.