Unjustified Agitation by the Packed LPG Transporters Puts Consumers in Distress: IOC
North East Packed Transport Association had gone in for a flash strike starting from August 27, 2020 in protest against the recently floated Packed Transportation Tender for Indian Oil Bottling Plants. No prior notice was received for the strike by Indian Oil.
While Indian Oil has already taken up the matter with the Transporters’ Association for calling off their agitation, the State Government and District Authorities have been apprised of the progress of the discussions.
The strike will put all the LPG consumers across the region in distress, especially during the COVID-19 pandemic when most customers are operating from home. The main demands of the transporters are as under:
1) Tender to be floated from Guwahati, instead of Kolkata.
2) There should be an increase of 50% over existing rates and rates for all plants in northeast should be the same, irrespective of any factor.
3) Only 306 capacity cylinder trucks should be inducted. Higher capacity 342/360 trucks and 10-wheeler (504/525) trucks should not be considered. Transportation rates should be worked out accordingly.
4) All LPG packed trucks that are currently under contract should be considered for induction.
5) Own use trucks for LPG distributors should not be considered in the tender.
6) Local transporters should be given priority over outsiders.
A meeting was held on 28.08.2020 in the Indian Oil AOD State Office premises in Noonmati, Guwahati to address the demands against the recently floated tnder.
The meeting was conducted by Indian Oil officials face to face as demanded by the transporters despite the risk involved with getting infected with the Coronavirus.
In the meeting, the transporters were informed on how the entire tendering process is handled online to reduce human intervention. The Regional Contract Cell, Kolkata functions as a nodal office for the entire eastern region and publishes tenders of high value exceeding Rs 50 lakhs as per policy. This is done to maintain transparency and increase the ease of doing business.
Even though the tenders were finalized at Kolkata, all administrative actions for the tenders as well as all post tender formalities that required direct communication between IOC and the transporter (e.g. work order, BG, submission of documents, agreement signing etc.) would be carried out at the Indian Oil AOD State office located at Noonmati.
Moreover, all verification of truck documents shall be done at the respective LPG Plants.
However, the transporters stuck to their demand of minimum 50% hike in earnings/trip. They also refused to budge from their demands of higher capacity trucks (342/360 and 10-wheeler) and no priority for distributors. They also mentioned that their strike would continue till their demands are met despite repeated requests by IOC.
This was even when some transporters accepted during the meeting that their average earnings/trip would go up by 10-13% in the new tender over the current contract. They also accepted that as on date, their monthly trips have gone up by 25% due to higher bottling levels over 2014-15, when the existing tender was finalized, especially after the rollout of the PM’s Ujjawala Yojna.
The introduction of higher capacity trucks has been done across the country after the Government of India notified the change in axle capacity of trucks in 2019. Based on this, Indian Oil has taken a decision to increase the truck capacity requirement to 342/357/360 from the current capacity of 306 cylinders. This will ensure additional transportation of 12-14% LPG cylinders, which will directly increase the availability of LPG to the customer.
There is absolutely no loss to the transporters because in the new tender they will get paid as per the increased carrying capacity. It may be pertinent to note that as on date, many higher capacity vehicles are already plying in various LPG Plants across northeast.
Addressing the demand for equal treatment of a distributor and a transporter, it is to be noted that the association of both the channel partners with Indian Oil is very different and cannot be compared. The LPG transporters can ferry LPG cylinders from LPG bottling plant to any distributors serviced by the bottling plant whereas the LPG distributor transport only few cylinders required at their distributorship. There has been no change in the tender condition for both the LPG Distributors and the transporters in the new tender as compared to the existing one. The distributors had got priority even in earlier tenders in northeast and erstwhile AOD, since 1990s and there was no objection made by the transporters before.
As far as the earnings from transportation of LPG cylinders from Indian Oil the LPG transporters earn very handsomely compared to an LPG Distributor. On an average, billings of most major transporters were around 2.4 – 3 Cr, which is around 9 times (900 %) higher against the average billings of a distributor of around Rs 25.0 – 30.0 lakhs during the same period.
The earnings of transporters are huge compared to their other counterparts in transportation industry. Moreover, unlike other businesses, LPG transportation was not affected by COVID pandemic. Transportation rates also have a bearing on the final price of LPG cylinders which must be borne by the customers.
There are also a lot of new parties who want to offer LPG trucks and are interested in participating in the tender. However, the tender which is on hold since 2018, is preventing any new party entering this lucrative business. This is highly detrimental to the society and public at large since it blocks entry of newer transporters which directly effects employment generation of local people.
Prior to the strike, the backlog of LPG cylinder delivery in the region had been reduced from nearly 10 days prior to the pandemic to only 1.6 days recently, which has increased to over 2 days as the strike progresses. Every day, nearly 1.5 lakh customers are affected by the strike and as the strike enters the 4th day today, nearly 6 lakh customers have been deprived of an LPG cylinder.
Thus, the Indian Oil management has requested the transporters to withdraw their strike and resort to discussions to resolve any issues that they have instead of putting the LPG consumers in distress.
Lastly, Indian Oil would like to reiterate its commitment of ensuring uninterrupted LPG supplies despite all challenges that we face.
(The above material is a press release issued by the Indian Oil Corporation and the views expressed in this article are their own.)
- LPG Transporters
- Indian Oil Bottling Plants
- North East Packed Transport Association
- Indian Oil
- Indian Oil Corporation
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