The Hindu : Front Page : Petrol, diesel prices marginally up

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Monday, May 26, 2008
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Petrol, diesel prices marginally up

N. Ravi Kumar

A result of corresponding increase in commission for petroleum dealers

Dealers not happy with the quantum
They may cut down on credit sales

CHENNAI: Petrol and diesel prices have marginally increased from Friday midnight consequent to a corresponding hike in the commission for petroleum dealers by the Union Ministry of Petroleum and Natural Gas.

Revision

In the city, the increase of three paise on petrol, taking the retail price of a litre of the fuel to Rs.49.64 and four paise on diesel, resulting in the price going up to Rs.34.44, however, has not cheered the dealers.

They complained that the quantum of the upward revision of commission fell short of their expectations.

Protest

The last time their commission was increased was in May last year from Rs.894 to Rs.1,024 on a kilolitre of petrol and from Rs.529 to Rs.600 on diesel.

Even that was given after the dealers protested against the insufficient quantum of upward revision – announced a few days earlier – from Rs.848 and Rs.509 respectively.

Under-recoveries

Sources in the trade also noted that Friday’s increase in their commission could be a prelude to the much-talked about increase in cost of fuels – something that national oil marketing companies have been seeking as a measure to cut their mounting under-recoveries.

The companies have been demanding that the petrol and diesel prices be increased by Rs. 10 and Rs. 5 a litre respectively.

Commission increase

Noting that the dealers were expecting a substantial revision in the commission, Tamilnadu Petroleum Dealers’ Association president M. Kannan said: “We are wondering why this paltry commission increase has been given.”

Working capital

But the dealers, he added, were also against any substantial increase in the petrol and diesel prices as besides hitting the consumers, the move would necessitate infusion of additional working capital.

Timeframe

However, if the imminent price increase comes through, the dealers would be cutting down on credit sales and reducing the timeframe for which they extend credit.

The credit sales, depending on the volume of the outlets in the city, vary from 20 to 70 per cent in the case of petrol consumers and around 50 per cent in the case of diesel. Diesel outlets on highways have a credit sale of up to 80 per cent.

Risks

Considering the risks involved, in terms of losing customers to competitors and difficulties in getting the outstanding, the dealers would cut down credit sales gradually, Mr.Kannan said.

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