Government Notifies Diesel Retail Supply Control Order to Curb Hoarding
The Ministry of Petroleum and Natural Gas has notified the "Motor Spirit and High-Speed Diesel (Temporary Regulation of Supply through Retail Outlets) Order, 2026" as a temporary measure initially valid for up to 90 days. The order aims to curb black marketing and hoarding of diesel by unscrupulous elements and ensure diesel availability to all retail consumers.
The regulatory measures were prompted by uneven extraordinary demand growth at some retail outlets due to shifting of bulk diesel volume to PSU Oil Marketing Retail Outlets. This shift is driven by industrial, institutional, and commercial consumers moving their procurement from dedicated consumer pumps to retail outlets due to a price difference of approximately ₹40 per litre between bulk and retail diesel. Private Oil Marketing companies experienced a 58% decline in High-Speed Diesel sales during May 2026 due to their higher pricing.
Data for May 2026 compared to the corresponding period last year shows a significant surge in diesel sales through PSU OMCs retail outlets, with 327 districts recording more than 10% growth and 80 districts seeing growth exceeding 30%.
Key Regulatory Provisions and Restrictions
The order mandates that retail outlets will dispense diesel only into vehicle tanks or PESO approved containers, with a maximum limit of 200 litres per day per customer/vehicle. Diesel purchased at retail outlets cannot be resold. Industrial, institutional, and commercial customers are prohibited from procuring fuel from retail outlets and must source their requirements through consumer pumps. Oil Marketing Companies and Retail Outlet Dealers are responsible for ensuring compliance with the prescribed restrictions and preventing circumvention of the order's provisions.
State governments and Union Territory administrations have been directed to take necessary actions against malpractices such as black marketing or unauthorized diversion. Violations will be subject to penalties and legal action under the Essential Commodities Act, 1955 and applicable laws.
Economic Context and Consumer Protection
PSU Oil Marketing Companies are currently absorbing losses of approximately ₹500 crore per day on the sale of petrol, diesel, and domestic LPG due to the ongoing West Asia disruption. This graduated price support is intended to protect retail consumers and ensure affordability for households, farmers, and other end-users, while bulk supplies continue to track international market prices. The government emphasizes that this is not a rationing measure and there is no shortage of petrol or diesel in the country, noting that India remains the world's 4th largest refiner and 5th largest exporter of refined petroleum products.