Mumbai: The government’s announcement of a 0.75% discount for purchases of petrol and diesel by way of e-payment is effective as of Tuesday and will be borne by state-owned oil marketing companies (OMCs) Indian Oil Corp. Ltd (IOCL), Bharat Petroleum Corp. Ltd (BPCL) and Hindustan Petroleum Corp. Ltd (HPCL), said two OMC executives.

“The discount will come into effect from 13.12.2016, 00.00 hrs. This amount of discount will be credited to a customer’s account by way of cash back within a maximum of three working days of the transaction," IOCL said in a press statement.

The government had on 8 December announced a discount of 0.75% for purchase of petrol/diesel through credit/debit cards and e-wallets at fuel retail outlets run by OMCs.

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“We are not calling it a discount. We would rather term it an incentive for people to use cashless modes of payment. We would be bearing all the burden of the 0.75% discount and not sharing it with any bank or payment solutions provider," said a senior executive from the retail section of one of the OMCs on condition of anonymity as he is not allowed to speak to reporters.

OMC officials said they do not expect the discount to last long and estimated a loss of around Rs600-700 crore over a three-month period.

“We are not looking at the Rs600-700 crore loss that we may incur. But the benefits that we will be deriving out of digitization. This will also strengthen our loyalty programmes," said another senior OMC executive, also on condition of anonymity.

It is, however, not clear whether the OMCs will be compensated by the government for the loss that they may incur on account of the 0.75% discount.

After announcing the demonetization of Rs500 and Rs1,000 currency notes on 8 November, the government allowed their use at petrol pumps and CNG filling stations initially and till 15 December in the case of Rs500 notes. Post-demonetization, OMCs have seen cashless transactions at their retail outlets double. “We have an arrangement with a few leading banks with regard to terminalization of our retail outlets and through them we have covered 56% of our retail outlet network for acceptance of credit/debit cards," IOCL said in an emailed statement.

BPCL and HPCL did not reply to an email sent on 8 December seeking details of the impact of demonetization.

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