Gas dealers demand Rs 50 commission per cylinder

THE Gas Dealers Federation Nepal (GDFN) has rejected the recent hike in their commission on LPG and demanded that it be raised to Rs 50 per cylinder. On Monday, the government had negotiated an increase in their cut to Rs 32 from Rs 28 per cylinder. LPG currently retails for Rs 1,470 per cylinder. The GDFN has threatened to stop distribution of LPG (liquefied petroleum gas) consumer cards from July 9 if their demand was not addressed. The GDFN is the sales agent of the Nepal LPG Industry Association (NLPGIA), the apex body of LPG bottlers which refills cooking gas cylinders and sells them in the market through its appointed dealers. On Monday, Nepal Oil Corporation (NOC) had raised the shipping charge, local transportation charge, company overheads and the commission for dealers and bottlers to Rs 19.28 per cylinder. The latest rate is a 9 percent increase from before. Under the new plan, the commission for LPG dealers was increased to a flat Rs 32 per cylinder. The GDFN said that the amount of commission was inadequate in view of current inflationary trends. “The commission hike for dealers is nominal considering the current market inflation,” said GDFN general secretary Maheshore Shrestha. Although the sales commission for dealers has been increased by Rs 4 per cylinder, they do not get this money as it is taken by LPG bottlers, Shrestha added. According to him, the GDFN has submitted a 13-point demand to the Ministry of Commerce and Supplies and NOC demanding an increase in their commission to Rs 50 per cylinder. The organization has also demanded that the market be regulated properly. “We are unable to operate at the present commission rate offered by the bottling companies, which has been hiked after four years.” Meanwhile, NOC spokesperson Shiva Prasad Pudasaini said the GDFN’s demand was not their concern as they are the sales agent of the NLPGIA that fixes the amount of their commission. “NOC has revised the commission based on the NLPGIA’s recommendation, and how it distributes the commission is irrelevant to us,” Pudasaini added. On June 3, the government had agreed to hike the commission rate after the NLPGIA refused to enforce a colour-coded LPG cylinder system without a raise. Based on this pledge, the traders distributed colour-coded LPG cylinders in the market from June 15. Subsequently, on Monday, NOC raised fulfilled their demand by putting an additional burden of per month on them. The increase in the commission rate has resulted in an additional burden of Rs 25 million monthly to NOC. Debt-ridden NOC owes Rs 28.50 billion in loans to the government and different banks and financial institutions. In addition to the dealer commission, NOC has raised the charge for shipping LPG from Barauni to Kathmandu to Rs 87 per cylinder from Rs 80.45. The local transport charge has been increased to Rs 29 per cylinder from Rs 25.36, while overhead expenses have been raised to Rs 52 per cylinder from Rs 50. The government move to raise the commission for dealers and transporters follows its ambitious plan to introduce a dual-cylinder system to end the subsidies being given to commercial users and enable NOC to cut its losses in the LPG business. The government plans to introduce a dual pricing system for LPG from July 15. As a prelude to this scheme, it has been distributing LPG consumer cards to categorize consumers into two groups—subsidized and non-subsidized. After the plan is enforced, the government will provide a cylinder monthly at subsidized rate to a household of four members. GDFN has threatened to stop distribution of LPG consumer cards from July 9 if their demand was not addressed.