Agents To Get More Commission Rates On Fuel Oil Sales

In a significant development, petroleum oil dealers in Bangladesh will now receive commission rates on a percentage basis, a decision that aligns with longstanding demands from pump owners and complies with the International Monetary Fund's (IMF) fuel pricing formula. 

The Energy Division issued a gazette on Tuesday, specifying agent commission rate as follows: 2.85% of the selling price for diesel, 2% for kerosene, 4.34% for petrol, and 4.28% for octane. This formula will henceforth be used to adjust fuel oil prices in the future.

This change is expected to increase earnings for petrol pump owners from their sales. However, it will also result in an additional expense of Tk222 crore in agent commissions for the Bangladesh Petroleum Corporation (BPC) at a time when the state-owned agency is grappling with the challenge of covering fuel oil import bills amidst a shortage of dollars and currency depreciation.

Prior to the implementation of this new formula, petroleum oil traders received fixed commissions per liter: Tk2.73 for diesel, Tk1.58 for kerosene, Tk4.68 for petrol, and Tk4.82 for octane. 

These commission rates remained unchanged even after a substantial increase in fuel prices in August of the previous year, leading to dissatisfaction among fuel oil dealers, who had threatened to close their pumps earlier this month.

Pump owners had been demanding an increase in their commission rates from 3% to 4.5% of the oil price. Under the new arrangement, pump owners will receive commission rates of Tk3 per liter on diesel, Tk2.16 on kerosene, Tk5.18 on petrol, and Tk5.32 on octane.

A senior official from the Energy Division explained that the IMF's conditions for introducing an automatic determination system for fuel oil prices, in line with the international market, necessitated fixed agent commissions and transportation fares. 

This move towards allowing the market to determine fuel oil prices through a permanent formula was one of the prerequisites for the IMF's $4.7 billion loan support, with the first tranche of $476.27 million disbursed in February.

On September 2nd, the Bangladesh Petrol Pump Owners Association took a stand by refusing to receive oil from depots while making multiple demands, including an increase in agent commissions and transport fares. They also announced their intention to go on strike if their demands were not met by September 30th. The BPC reassured them of their commitment to implementing these demands.

The association has welcomed the shift to a percentage-based commission rate system. Syed Sazzadul Karim Kabul, the association's president, stated, "Pump owners have been advocating for commission determination on a percentage basis for an extended period. 

Under this new system, pump owners will receive commissions in proportion to their investments, which will support their business sustainability." Kabul further noted that in most countries, the commission percentage is fixed, and this change will enable pricing in an international manner.