Delhi petrol pumps strike work over VAT hike

Nearly all petrol pumps in Delhi shut shop on Friday to protest the increase in VAT on diesel.

Updated: May 14, 2010, 13:14 PM IST

New Delhi: Nearly all petrol pumps in Delhi shut shop on Friday to protest the increase in VAT on diesel that has made the fuel costlier in the national capital compared to neighbouring Haryana, the pump dealers union claimed.

"Out of 410 petrol pumps in Delhi, only 18 outlets owned and operated by oil companies are functioning. The rest shut operations for 24 hours at 0600 hours today," Delhi and
NCR Petrol Dealers Association President Ajay Bansal told a news agency.

An Indian Oil official said eight company owned and company operated outlets of BPCL and five each of IOC and HPCL were operating.

After the day long token protest today, the pump dealers said they will shut shop every Monday till their demand for lowering VAT on diesel is met and even threatened to go on an indefinite strike.

"Sale is drying up as differential in diesel price in Delhi and Haryana is almost Rs 4 per litre. We (union) are under pressure from dealers to go on an indefinite strike and we will have to consider this option if our demands are not met," he said.

In June 2008, Haryana reduced VAT on diesel to 8.8 percent from 12 percent, thereby making it cheaper than Delhi where VAT on fuel was 12.5 percent.

"From 13.5 crore litres a month, the sales of diesel in
Delhi came down to 8.5 crore litres a month (loss of 37 percent)," he said.

Already "bleeding" dealers were further dealt a body blow
when the Delhi Government from April 1 raised VAT on diesel to
20 percent.

"This has resulted in a difference of almost Rs 4 per
litre in the price of diesel between Delhi and Haryana,"
Bansal said.

Delhi is bordered on all sides, but East, by Haryana.

The increase in VAT has made diesel in Delhi more
expensive than even Uttar Pradesh, which is east of Delhi.
Large number of vehicles coming into the national capital from
Haryana or UP daily prefer refuelling outside.

"Due to this price differential, we expect a further drop
in sale from the present 8.5 crore litre per month to three
crore litre per month (total loss of 80 per cent)," he said.
"As a result the state is going to suffer heavy revenue losses
to the tune of Rs 325 crore per annum."

The Association claimed that the differential price would
also encourage smuggling and black marketing of cheaper low
grade diesel into Delhi which from April 1 has moved to
Euro-IV compliant fuel.

"The unviable petrol dealers will have to resort to cost
cutting for survival," the union said, listing steps like
reducing manpower and reduced working hours.