Fuel dealers fume at govt failure to raise margin

Automobile fuel dealers, numbering 38,000, are fuming at the petroleum ministry’s failure to keep its promise to raise commission.

The ministry had recently promised these dealers to increase their commission by Rs 397 per kilolitre (kl) on petrol and Rs 170 per kl on diesel. Dealers now get a commission of Rs 1,230 per kl on petrol and Rs 730 per kl on diesel.

Ravi Shinde, executive committee member of the Federation of All-India Petroleum Traders, told Business Standard: “The ministry, on the recommendations of oil marketing companies (OMCs), had increased commission two years ago. They had recently promised to do so with the rise in auto fuel price. However, it has not happened.”

“Auto dealers are also facing enhanced evaporation losses. Petrol evaporates at 0.6 per cent and diesel at 0.2 per cent. This now evaporates at a higher price, which erodes the margin further. This factor alone erodes the already slim margin of a petrol dealer to an unsustainable level. With every increase in price of petrol and diesel, the working capital requirement goes up proportionately. Dealers depending on bank finance have to bear additional burden of interest,” he said.

Ministry officials, who did not want to be quoted, said they would certainly look into this aspect. Shinde said dealers would pursue their demand to fix the margin on a percentage basis. “This will offset fluctuation in dealer margin on account of any rise or decrease in auto fuel price. Despite repeated representations, the ministry and OMCs are yet to consider this long pending demand,” he said.

He said wages had shot up by almost 50 per cent across the country and particularly in major cities. This has also increased dealers’ burden. Similarly, there has been a sizeable rise in electricity cost.