You’re Getting Overcharged At Petrol Pumps – Here’s Why

Every fortnight, as the clock ticks towards midnight, millions of citizens tune in to news channels or refresh their social media feeds, anxious to learn the new revisions to petrol and diesel prices from the Oil and Gas Regulatory Authority (OGRA).

However, if you’ve ever paid attention to the petrol prices on your local pump, you might have noticed a persistent discrepancy. 

The rate shown on news channels or social media often doesn’t match what you end up paying at the pump. There’s typically an extra 1.5 to 2 rupees per liter extra on the pump’s dispenser than the price displayed on TV.  For example, the current petrol rate as of the publication of this story is Rs. 263.45, but at petrol pumps the price is around Rs. 265.2.

Have you ever wondered why?

No, the petrol pumps are not charging extra; it’s the economics of the “Last Mile.”

The Gap Between the Depot and the Nozzle

To understand why your receipt never matches the news ticker, one must understand what the “official” price actually represents.

When OGRA announces a petroleum price notification, it communicates the Ex-Depot Price. This is the cost of the fuel as it sits in the massive storage tanks of the Oil Marketing Companies (OMCs). The government attempts to calculate an Inland Freight Equalization Margin (IFEM) to keep prices relatively uniform across major cities, but the regulatory math often stops at the depot gate.

Logistics are Required to Deliver Fuel from the Depot to the Pump

Since the fuel does not magically teleport from a storage depot to the petrol pump, it requires logistics. 

The logistics probably include hiring a tanker, loading the fuel, and physically transporting it from the OMC’s nearest depot to the pump.

A petrol pump owner cannot absorb the cost of tanker delivery from their fixed dealer margin, which is already regulated and squeezed by inflation. Consequently, this transportation overhead is passed down to the final link in the chain, the consumer. 

The further a petrol pump is located from the main supply depot, the higher this variance is likely to be. That extra Rs. 1.68 or Rs. 1.90 you see on the meter is the delivery fee for bringing the fuel to your petrol pump.

That’s why every time, the petrol price is always a few rupees higher than it’s displayed on social media and news channels.