By The Government Stands Firm Amid Dispute Over Revised Commission Rates
Fuel distributors across Sri Lanka have halted credit sales to government institutions, including hospitals, due to a dispute over revised commission rates set by the Ceylon Petroleum Corporation (CPC). This sudden decision, which has already caused queues at fuel stations and raised concerns of a potential fuel shortage, is expected to continue until the matter is resolved. As the government stands firm, hoping to explain the situation to distributors and bring about a resolution, the police are faced with significant challenges in managing the unrest.
The Commission Dispute: A Complex Issue
The conflict centers around the CPC’s decision to reduce the commission for fuel distributors from 3% to around 1.7%, as part of a new fuel pricing formula. Distributors argue that the reduction has slashed their profits by more than 43%, prompting them to stop selling fuel on credit to state-run entities.
Kusum Sandanayaka, Vice President of the Fuel Distributors Association, said that nearly 500 fuel shed owners ceased credit sales yesterday, in line with the association’s decision. Additionally, distributors have suspended placing new fuel orders, heightening fears of an imminent fuel shortage.
The issue came to a head when the CPC invited the distributors to a meeting scheduled for Tuesday to discuss the matter. However, the dispute is far from simple, as it is not just about profit margins but also about the broader implications for the fuel supply chain and the country’s fuel needs.
Government Response: Standing Strong
The government, through CPC Chairman Janaka Rajakaruna, has expressed its commitment to resolving the issue and making the matter clear to distributors. The CPC maintains that sufficient fuel is available for the entire year, urging the public not to panic. Rajakaruna emphasized that legal action would be taken against any party attempting to disrupt the country’s fuel supply, warning that the government will not hesitate to ensure public convenience.
“We are committed to stopping the provision of commissions to a limited group of individuals who benefit from taxpayer money,” said Rajakaruna. “Instead, this revenue should be used for the benefit of the entire nation.”
Despite claims by some distributors that the commission cuts are damaging, Rajakaruna has defended the CPC’s new pricing formula, arguing that it is based on sound calculations. He pointed out that, under the new system, a fuel station selling 15 loads a month would earn significantly more than previously stated by distributors.
The Impact on the Public: Fuel Shortages Loom
While the government remains resolute, the situation has caused widespread concern among the public. Long queues have been reported at fuel stations in Colombo and other areas, with people fearing fuel shortages by Monday. The decision to halt fresh orders has led to uncertainties about the availability of fuel in the coming days.
The government’s stance has been clear, with CPC officials assuring the public that there is no immediate threat to the fuel supply. However, the impact on fuel distributors, particularly smaller stations, cannot be ignored. Many dealers argue that the revised commission rates make it difficult for them to sustain their businesses, and they are united in their opposition to the new formula.
The Bigger Picture: Corruption and Transparency
The ongoing dispute also raises questions about transparency and accountability within the fuel distribution system. A 2022 national audit revealed that Rs. 4.349 billion had been overpaid in dealer commissions, which had not been recovered by the CPC. This has led to criticism of the system, with accusations that some filling stations were benefiting from political patronage.
CPC Chairman Rajakaruna responded by noting that there were instances where stations were opened in remote areas, without proper consideration of demand. He also highlighted the disparities between different categories of filling stations, asserting that larger stations were generating significantly higher profits compared to smaller ones.
Moving Forward: The Government’s Plan
The government has indicated its readiness to engage in further discussions with distributors to address their concerns. The CPC’s invitation for a meeting with distributors on Tuesday represents a chance for both sides to come to a mutual understanding. The government hopes to clarify the situation and resolve the issue without disrupting the fuel supply or the livelihoods of distributors.
Despite the challenges, the government is standing strong and is determined to ensure that the fuel distribution system is fair and sustainable in the long term. As the dispute continues, the police remain on high alert to manage any potential public unrest, while the government focuses on reaching a resolution that will benefit both fuel distributors and the citizens of Sri Lanka.
