Centre’s curbs on diesel sales worry hospitals, IT parks; telecoms seek exemption

The Centre’s decision barring industrial, commercial and institutional consumers from buying diesel at petrol pumps has raised concerns among hospitals, telecom operators, 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.

Industry executives told PTI that the restrictions could disrupt fuel procurement for sectors where diesel generators remain critical to operations.

Why did Centre order curbs?

The Ministry of Petroleum and Natural Gas 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.

The Motor Spirit and High Speed Diesel (Temporary Regulation of Supply through Retail Outlets) Order, issued on June 11, will be in force up to 90 days and can be extended through another government order.

Also read: Govt bars bulk industrial petrol, diesel purchases through fuel stations

The government made the move in view of unprecedented sales of diesel at retail outlets, especially by companies that started buying fuel from retail petrol and diesel pumps instead of buying in bulk as the latter is costlier.

Retail fuel, for instance, costs just Rs 95.20 per litre at retail pumps, while the same when bought in bulk is priced at Rs 134.50 per litre.

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.

“It has been observed in current situation that abnormal increases in sales of Motor Spirit (petrol) and High Speed Diesel (diesel) through Retail Outlets in certain parts of the country are driven by shifting of industrial, commercial and institutional consumers to Retail Outlets owing to the price difference between retail and bulk sale prices,” the ministry said in its notification.

Need for diesel in critical sectors

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.

Also read: India eyes diesel-isobutanol blending mandate this year to enhance energy security

“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," an executive at a hospital chain told PTI.

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.

Telecom sector urges exemption

Telecom operators have urged the government to urgently consider exempting them from the order, stating that the curbs could hinder the operation of mobile towers and impact the service quality of users during power outages.

“Any disruption in diesel supply directly affects DG (diesel generator) operations, potentially leading to outages impacting voice/data services, including emergency communications across the 1.3 billion subscribers,” The Mint quoted Digital Infrastructure Providers Association (DIPA) as saying in a letter to the Department of Telecommunications (DoT).

Also read: Petrol, diesel prices raised by over Rs 2.5 each; fourth hike in less than two weeks

Major telecom companies like Indus Towers, Ascend Telecom Infrastructure, and Altius Telecom Infrastructure come under the aegis of the forum.

"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 told PTI.

‘Operating costs could rise’

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.

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.

Retail-bulk difference

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 the cost.

Also read: Centre slashes windfall tax on fuel exports; petrol, diesel, ATF levies reduced

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 between retail and bulk prices has also led to a shift in sales patterns, 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.

(With inputs from agencies)