Petroleum dealers warn of increasing fuel price if commission not increased

Published On: January 13, 2021 11:51 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Jan 13: Stating that it has become difficult to run the business as the Nepal Oil Corporation (NOC) has not increased the commission for selling petroleum products for four years, the fuel distributing entrepreneurs have announced to increase the fuel price on their own, if NOC does not  increase the rate of commission for the oil distributors. 

The Nepal Petroleum Dealers’ National Association (NPDNA) has warned to increase the selling price of diesel and petrol by 50 paisa per liter from January 14, saying that the commission set by the corporation has not covered the operation cost. 

The association is an umbrella organization of petroleum businesses.

The association has been demanding an increase in commission on sale of petrol and diesel. The corporation pays 3 percent commission on petrol and 2.65 percent on diesel to the pump operators. Entrepreneurs have demanded 4 percent on diesel and 4.5 percent on petrol.

Lilendra Pradhan, president of the Nepal Petroleum Dealers’ National Association, said that the association is forced to sell at a higher price as their demand was not addressed even after repeatedly drawing the attention of NOC.

“The current commission does not cover the operating expenses of the entrepreneurs,” he said. “Since the demand has not been addressed, we have decided to increase the price ourselves.” They claim that they have not been able to run the business from the operating expenses specified by the corporation. 

There are about 1,500 petrol pumps in the country.

Businesses claim the corporation has ignored the recommendation of the experts to increase the commission rate based on the business situation. The experts had recommended an increase in commission by classifying sellers into two levels.

A group of experts had suggested a 3.12 percent commission on diesel and 3.39 percent on petrol for pumps that sell a minimum of 61 to 120 kiloliters a month. Similarly, those who sell 121 to 180 kiloliters of diesel should be given 3.12 percent commission and 3.40 percent commission on diesel and petrol, respectively, experts had suggested.

Bishwo Prasad Aryal, general secretary of the association, said that the commission recommended by the expert’s group will add burden to the consumers. “The commission recommended by the expert’s group should be implemented by the corporation,” he said. “If they don’t listen to our demands, we will make the program public.”

As per the Petroleum Dealers Regulations (2075), entrepreneurs are not allowed to set prices arbitrarily. 

The corporation has said that it will take action as per the rules if the dealers charge more than the stipulated price. Entrepreneurs say that only 35 percent of the operating pumps are in profit. Petrol pumps across the country sell 1.5 million liters of petrol and 4.8 million liters of diesel daily.

Entrepreneurs argue that the commission rate should be increased in Nepal as it is lower in comparison to other countries. In India, the commission is 4.1 percent on petrol and 3.13 to 3.4 percent on diesel. 

The association claimed that the commissions for trading in petroleum are 4 percent in Pakistan and China on diesel and petrol 5 percent in Sri Lanka and the United States on the same items.




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