Oil companies should raise dealers' commission: Petrol pump association

Oil companies should raise dealers' commission on the sale of petrol and diesel to 5% of retail price as operating costs have risen, All India Petrol Pump Dealers Association (AIPDA) has said.

Dealers' commission is decided by a five-year-old formula that has fixed as well as variable components.On average, dealers are currently getting a commission of Rs 3.78 per litre of petrol in Delhi. On diesel, it is Rs 2.57 per litre. As a percentage of retail price, the current commission is about 3.9% for petrol and 2.9% for diesel.

The dealers' commission hasn't been revised for the past five years even as operating costs and facilities at pumps have increased, AIPDA president Ajay Bansal said. Oil companies had agreed in November 2016 to review dealers' commission every six months by factoring in the operating costs but they haven't done so, Bansal said.

Higher dealers' commission can push up retail prices and contribute to inflation.

AIPDA representatives have also met petroleum ministry officials regarding their commission. They also demanded some mechanism to protect dealers when duties are substantially cut.

Bansal said dealers lost about Rs 2,100 crore due to sharp drop in duty over the weekend as they had paid duties for their stock but couldn't recover it from customers. When duties rise, dealers make proportionate gains.

AIPDA also demanded inclusion of petroleum products in GST.