Petroleum dealers across Karnataka will resort to ‘no purchase’ agitation on October 1 and 2 demanding among other things, fixing of their commission on the basis of retail sales price (ad-volerum) instead of the present fixed commission per litre sold.

This agitation is a part of nation-wide move called by the Confederation of Indian Petroleum Dealers (CIPD), which is demanding implementation of the recommendations of Apporav Chander Committee, appointed by the Ministry of Petroleum and Natural Gases in 2010, said N. Bhushan Narang, President of Karnataka Petroleum Dealers Association.

Mr. Narang told The Hindu that on the two days dealers will not buy any product, petrol, diesel and auto LPG. However, they will sell the products till the stocks last. If the Ministry and public sector oil companies do not heed to their demands, the dealers will resort to one-shift sales, that is, from 9 am to 6 pm in city limits and from 6 pm to 6 am on highways.

While motor vehicle owners may not be affected on October 1 and 2, there could be long queues when the dealers resort to one-shift sales, Mr. Narang said. The demands of the dealers, according to the Confederation, have long been pending and the Ministry has failed to address them. Instead of fixing commission ad-volerum, the Ministry on September 20 had asked public sector oil marketing companies to revise the commission on high speed diesel on the basis of old formula, the Confederation has said.

The recommendations of the Committee include, fixing the stock loss on petrol at 0.75 per cent; charging air and toilet facilities at fuel pumps; fixing the dealer margin on price of the product in the state; reviewing the commission every six months and so on.

LPG dealers

Meanwhile, the LPG dealers attached to public sector oil marketing companies, who had threatened to launch nationwide agitation from October 1, are yet to take a final call on the proposal. N. Sathyan, Secretary of All India LPG Distributors’ Federation, Karnataka Chapter, told The Hindu that three sets of prices have been communicated to the dealers, one for domestic subsidised cylinders, one for domestic non-subsidized and the other for exempt categories, like government hospitals, mid-day meal scheme etc. There is still lack of clarity and the future course of action will be decided in a day or two, he said.

Dealers are overburdened

Petroleum dealers in Karnataka have stated that the present pattern of paying commission on the basis of Rs/ litre is unscientific and it should be on the volume of sales transaction. “We are not going to settle nothing less than 3 per cent on the total business done,” said one of the Indian Oil dealers in Bangalore.

The expenditure on staff alone at a mid-sized dealership, which appoints about 20 people, would be about Rs 2 lakh a month. Added to this, there are expenditure related to power, maintenance, local taxes, ‘tips’ to various government officials and the like, the dealer said.

On being asked whether their margin would not come down if the retail sales prices of fuel come down, the dealer said in that event the cost of living too comes down and hence they can manage the show. At the present rates of cost of living, it is becoming extremely difficult to run the show, he said.

Besides archaic commission formula, public sector oil marketing companies’ zeal to open and more fuel pumps is eating into the profit margins of the existing dealers, he said. Even though the number of vehicles on roads is increasing, there is no corresponding increase in the volume of sales as every day new outlets are being opened. There could hardly be about 5 per cent increase in the sales a year in the existing circumstances, the dealer said.

There are more than 500 dealers in Bangalore alone and about 4,000 in Karnataka. A mid-sized pump within the city sells about 5000 litres of petrol and about 10,000 litres of diesel a day. The present commission on this volume works out to be very less, the dealer said.

Besides expenditure towards operations and maintenance, a dealer has to keep officials of various government departments, including Food and Civil Supplies, Legal Metrology, local municipal body, Labour Department, Employees State Insurance Corporation etc., happy and this costs not less than Rs. 1 lakh a year. “We are fortunate that we need not bribe officials of oil companies and they stand by us in keeping our operations clean,” the dealer said.

Asked about the practice of short supply of fuel in some of the pumps, the dealer vehemently denied that the management of the pump was in any responsible for this. “In fact, we are making every effort to scuttle such practice by pump operators. Since we will not be at the pumps throughout the day, the operators sometimes indulge in malpractice,” he said.

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