You may have to shell out more for petrol and diesel from today

Starting today, petrol and diesel prices will cost a little more as as the oil marketing companies (OMCs) have decided to increase the dealer commission which is paid to petrol pump owners.

According to a report in Financial Express, the All India Petroleum Dealers Association has been asking for a Re 1 per litre hike for petrol and Rs 0.72 litre for diesel on the dealer commission which is currently at Rs 2.55 per litre for petrol and Rs 1.65 per litre for diesel.

The report quotes Ajay Bansal, president of All India Petroleum Dealers Association saying that the new commission rates will be effective from August 1.

"The national average sale per outlet is 170 kilolitres of fuel every month. Assuming this sale, a dealer makes only 14 paise per litre which converts to around Rs 25,000 of profit per month," says Bansal.

Petrol pump dealers have been protesting against the daily price revision in retail prices of fuel. The dealers' association has claimed that the present system cuts down their margins due to inventory losses when global crude prices come down.

In the earlier system, the price of petrol and diesel changed every fortnight based on global oil prices. The new price mechanism is more dynamic as the consumers can get immediate benefit from changes in international crude oil prices. The global rates of crude oil prices have been sliding in recent days due to which the prices have seen a fall in Indian cities too.

More than 59,000 petrol pumps presently cater to the fuel needs of India and have been getting good returns out of it too. However, reports suggest that commission dealers earn on petrol has almost tripled in the past 13 years, whereas the same for diesel has almost quadrupled in this time period

As of April, 2017, petrol pump owners earn Rs 2020.38, plus 0.86 per cent of retail price, as commission for selling every kilolitre of petrol, stated a study by Newsflicks. The same figure in April, 2004 stood at Rs 778. The commission in case of diesel, as of now, is Rs 1502.13 and 0.27 per cent of retail price per kilolitre, against Rs 425 for the same quantity.