CPC to introduce formula for determining fuel distributor’s commission

Ceylon Petroleum Corporation (CPC) Chairman D.J.A.S. De S Rajakaruna said that a price formula will be introduced instead of the method of determining the fuel distributor’s commission compared to the oil price in the world market, which was followed by the Petroleum Corporation until now.

Rajakaruna said this at a press conference held at the CPC yesterday (4).

Stating that fuel distributors are a part of the fuel supply network that provides an essential service, the Chairman emphasised that misuse of public money is not approved of and that the fuel supply network should be transparent and fair.

According to the oil price in the world market, a 2.25 percent commission was given to the fuel distributors and another 0.5 percent was temporarily added to that amount due to the economic crisis the world was facing.

In 2018, the Government added 0.5 percent to the fixed commission rate. Due to the increase in fuel prices in the world market in 2022, the fuel distributor’s income has increased drastically. Accordingly, in 2022, fuel distributors received a commission of Rs. 14 per litre of octane 92 petrol and a commission of Rs. 13.80 per litre of diesel.

Rajakaruna also pointed out that the data at the Auditor General’s Office has confirmed that the CPC has lost Rs. 35 billion in 2022 due to the temporary 0.5 percent commission given to fuel distributors in 2018.

Therefore, the CPC’s Board of Directors has decided that it is not accurate to determine the commission amount of fuel distribution agents with the fuel price in the world market. As with local businesses, it has been decided to determine the commission of fuel distributors based on local conditions only. Therefore, the Chairman said, an expert committee has been appointed to create a price formula for determining the commission of fuel distributors.

The CPC has proposed to give an allowance of Rs.6 per litre of fuel until the price formula is fixed.

The fuel distributors have taken steps to obtain a restraining order from the Court regarding this proposal. Accordingly, even now, Rs. 8.49 per litre of diesel and Rs. 9.33 per litre of petrol is paid as commission for fuel distributors.

Rajakaruna said that this year the fuel price was revised according to the fuel price formula.

Previous governments have entered into various agreements so that the CPC cannot act independently. Especially in the implementation of the price formula, if there is any loss to other competing institutions, the previous regimes have signed agreements to cover that loss from the CPC.

Under these agreements, the CPC has given 450 filling stations that obtained the best sales to competing companies and thus the Petroleum Corporation’s fuel sales have decreased by 50 percent.

Also, Rajakaruna said that former regimes have arranged to handover the equipment that was in the possession of the CPC to those institutions within 45 days.

Also, a licence has been issued to a private sector company for the provision of aircraft fuel by the previous CPC heads. However, that company is still doing all the operations with the equipment belonging to the Petroleum Corporation.

Therefore, the Chairman further stated that the CPC’s lubricants, fuel and agro sectors, which have been dealt such a heavy blow, will recover.

CPC Managing Director Dr. Mayura Neththikumarage also joined this event.

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