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Petrol pumps overcharge, says CAG; holes in fuel pricing system

The audit showed that there were 3,463 instances in 91 out of 188 outlets (Indian Oil - 40, Hindustan Petroleum -35 and Bharat Petroleum -16) when dealers were not prompt in changing the prices at the prescribed time of 6 a.m

twitter-logoJoe C Mathew | February 11, 2021 | Updated 14:41 IST
Petrol pumps overcharge, says CAG; holes in fuel pricing system
The daily prices were manually revised within the range of 587 minutes before 6 a.m. and 1,078 minutes after 6 a.m

Apex auditor Comptroller and Auditor General of India (CAG) has found that the daily pricing system for petrol and diesel has been far from perfect until recently. Lack of promptness in changing the prices by dealers, absence of sustained connectivity, and instances of overcharging due to flaws in automation system have been identified as key issues. The findings are part of the CAG report No.18 of 2020 - Union Government (Commercial) tabled in the Parliament on February 9.  The audit covered the period from 2014-15 to 2017-18.

The audit showed that there were 3,463 instances in 91 out of 188 outlets (Indian Oil - 40, Hindustan Petroleum -35 and Bharat Petroleum -16) when dealers were not prompt in changing the prices at the prescribed time of 6 a.m. The daily prices were manually revised within the range of 587 minutes before 6 a.m. and 1,078 minutes after 6 a.m. Overcharging from customers by the dealers at such instances could not be ruled out, observed CAG. The 188 outlets (automated - 61 and non-automated - 127)  were picked up from the 55,013 retail outlets under the control of the three government oil marketing companies.

Observing that automation of retail outlets with price push application along with sustained connectivity ensures a prompt and correct change of prices by eliminating manual intervention, CAG report revealed that oil marketing companies (OMC) had automated only 43 per cent of retail outlets in June 2017 (at the time of implementation of the policy) indicating lack of preparedness.  "As per directives (November 2017) of ministry of petroleum and natural gas (MoPNG), automation of all retail outlets were supposed to be completed by December 2018. However, only 80 per cent outlets were automated by three OMCs by December 2018 with a capex of  Rs 1,487 crore," CAG report said.

"In case of HPCL and BPCL, some of the ROs, which were compliant for daily price push, could not successfully receive the pushed price mainly due to lack of sustained connectivity. Review of data of HPCL for the period 16 June 2017 to 30 June 2018 showed that daily failure rate ranged between 9 and 88 per cent and for BPCL (from 20 June 2017 to 30 June 2018) the failure rate ranged between 59 and 93 per cent. None of the eight automated ROs of IOCL visited by Audit staff had sustained connectivity resulting in manual price change by the dealers," the report said.

The report also found lack of promptness in changing the prices by dealers. "There were 95 instances (IOCL- 41, HPCL-54 and BPCL-nil) when prices were revised on higher side than the prevailing retail sale price for the day by the dealers resulting in overcharging which is a major irregularity in terms of Marketing Discipline Guidelines (MDG)," the report says. It said that IOCL and HPCL in their responses on February 2019 and April 2019 respectively highlighted practical difficulties like greater number of dispensing units involved in change of prices, lack of connectivity, operation of retail outlets in shifts, repairing of printers, and automation of outlets etc. as the cause of such anomalies. BPCL said it has initiated corrective actions such as issuing of detailed SOPs, guidelines to field officers and dealer network etc. In its response, the Ministry of Petroleum and Natural Gas had clarified (in February 2020) that auto price push with VSAT and Real Time transfer technology was already implemented at 68 per cent of the total automated retail outlets with a 100 per cent target for December 2020.

The report said that OMCs have accepted incorrect charging of prices pointed out by audit. "IOCL attributed (in April 2019) incorrect charging of prices to wrong prices communicated by the company to the dealers, absence of malafide intention by dealers, practical difficulties involved in changing of prices and that the dealers were cautioned for these errors," it said.

The report also flags malfunctioning of the Apps and SMS facility and states that it needs attention since it would improve confidence level of customers regarding the price charged to them.

Also read: Petrol crosses Rs 87 per litre in Delhi for first time; taxes account for 61.3% of price

Also read: Almost Rs 100 per litre! Petrol, diesel prices in this city are highest in country

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