Fuel consumers get relief, but low margins keep Karnataka dealers in distress

The government has reduced excise duty on petroleum products in a relief to consumers.

But, discontent is brewing among petroleum dealers in the state whose commission has remained the same for nearly five years, while the operational costs have gone up by several times. Any increase is likely to add to the price paid by the common man.

Petroleum outlets get a commission of Rs 3.26 for selling a litre of petrol and Rs 2.16 for diesel, as per a decision taken in 2017.

The margin was revised after a threat of country-wide protests by dealers.

In the following years, fuel prices have climbed steadily, but the returns for the dealers have remained the same.

Read | Despite cuts, petrol still over Rs 100 in Karnataka

Taranath, vice president of the Akhila Karnataka Federation of Petroleum Dealers (AKFPD), said both the fixed costs and variable costs have shot through the roof while consumption has come down due to low purchasing power of people.

“This has left us in a tricky situation. Over the last five years, the higher input cost on fuel and other things has led to a 45% increase in our investment. During the same period, the wages of the staffers in Karnataka have gone up by 64% on an average. But our margins have remained the same. At the same time, the fuel consumption has not returned to the pre-Covid levels,” he said.

Dealers have been demanding that the government implement the recommendations of the Apoorva Chandra committee report submitted in 2011.

The committee had said that margins should be fixed based on the investment made by a particular dealer. In 2016, a joint meeting of oil marketing companies, dealers and other stakeholders had agreed for revision of margins every six months.

“We agree that the government needs to address the burden on the common man. At the same time, it has to look at dealers many of who are surviving on loans. Our demands can be met by reducing taxes by less than a rupee,” a dealer said.

AKFPD president K M Basavegowda explained the problem in a letter to the union government.

The letter stated that the licence fee has gone up by 750%.

"The ever increasing salary bills, increasing bank expenses and many factors are not considered while revising the margin. This has led to financial stress for dealers," he added.

Watch latest videos by DH here: