IOCL Bulk LPG Loading Halted Across South as Transporters Allege ₹50 Crore Pending Dues

In a significant disruption to the bulk LPG logistics network of Indian Oil Corporation, nearly 1,000 LPG tanker trucks attached to the Corporation’s southern transportation grid suspended loading operations on Monday, alleging non-payment of transport bills, long-pending toll reimbursements and unexplained deductions under the newly awarded 2025-2030 transport contract amounting to nearly ₹50 crore.

The coordinated suspension, led by the Southern Region Bulk LPG Transport Owners’ Association, has directly impacted LPG loading from major IndianOil-linked supply locations in Chennai, Palakkad, Thoothukudi, Mangaluru and Bengaluru to bottling plants spread across southern India. IndianOil operates one of the country’s largest LPG distribution ecosystems with around 100 LPG bottling plants and an extensive nationwide Indane delivery network, making uninterrupted road tanker movement a critical component of domestic LPG replenishment.

Each bulk tanker deployed in this chain carries approximately 18 tonnes of Liquefied Petroleum Gas, and transporters say the halt has the potential to disturb refill scheduling at multiple bottling units if the impasse is not resolved on an urgent basis.

Association Alleges Long Pending Freight Payments, Toll Claims

According to office bearers of the association, transport operators had formally met senior IndianOil officials on April 9 and submitted a detailed grievance memorandum highlighting delayed trip payments, toll reimbursement claims pending for nearly five years, and substantial deductions ranging from ₹10 lakh to ₹18 lakh per transporter under the fresh transportation agreement.

However, the association has alleged that despite repeated representations, no effective remedial action has been taken by the Corporation.

Transporters further claim that several recoveries were made citing discrepancies linked to bank guarantee submissions and financial documentation. They contend that such deductions were carried out without prior communication, without providing an opportunity for rectification, and without transparent explanation from IndianOil’s finance wing.

“The issue appears to be more of an internal finance department mismatch than transporter default. In such circumstances, unilateral withholding of legitimate operating payments has pushed the fleet into a financial deadlock,” an office bearer of the association said.

₹60,000 Working Capital Per Trip Becoming Unsustainable

Sources in the transporter body said that running a long-haul LPG tanker over an average 1,000-km route requires an upfront working capital of nearly ₹60,000 per trip towards diesel, driver wages, toll charges, statutory permits, maintenance and emergency compliance expenditure.

With freight receivables delayed and toll claims blocked, many fleet owners have reportedly reached a point where further operations are commercially unviable.

The association has now sought:

• immediate release of all pending transport bills,
• settlement of accumulated toll reimbursements,
• refund of deducted amounts,
• and written clarification on all bank guarantee-linked financial recoveries.

In a formal communication issued to IndianOil earlier this month, transporters had warned that failure to clear dues within ten days could lead to an “unavoidable operational crisis,” making the Corporation accountable for any interruption in LPG movement.

Supply Continuity May Come Under Pressure

The current suspension assumes significance at a time when the Petroleum Ministry and oil marketing companies are maintaining heightened focus on uninterrupted domestic LPG availability. The Centre has recently directed refineries to operate at high capacity and augment domestic LPG production to ensure there is no shortage in household cooking gas supply.

Industry observers note that while refinery production may remain stable, any prolonged breakdown in the road tanker evacuation mechanism can create a bottleneck between bulk storage points and bottling plants, particularly in high-consumption southern states where refill cycles depend heavily on daily tanker rotation.

Raises Larger Questions on PSU Contractor Payment Discipline

Beyond the immediate strike, the standoff has once again exposed a recurring structural issue in PSU logistics contracting — delayed vendor settlements, weak reimbursement mechanisms, absence of real-time dispute resolution, and unilateral financial deductions that place transport contractors under mounting liquidity stress.

Sector experts point out that state-run oil marketing companies rely extensively on private fleet operators for movement of LPG, petroleum products and industrial fuels, yet payment discipline and contractual communication often remain a weak link in maintaining supply-chain resilience.

The present disruption in IndianOil’s southern LPG movement is therefore being seen not merely as a transporter agitation, but as a warning signal on the financial sustainability of outsourced logistics partners servicing India’s critical energy infrastructure.

With loading operations remaining suspended across multiple southern dispatch points, all eyes are now on whether IndianOil initiates an immediate financial reconciliation with transporters or risks a wider bottling and cylinder replenishment slowdown in the region.