CPC dealers overpaid Rs.4 b in commissions

Details of how loss-making, state-run Ceylon Petroleum Corporation (CPC) has overpaid millions of rupees as commissions to its dealers without considering the stipulated official procedure have been revealed in a recent audit inspection report of the Auditor General’s Department.

With the aim of streamlining the payment of commission to dealers the Board of Directors has taken a decision (Board paper No 05/12/31) to change the existing practice of paying 2.5 per cent of the price per litre of fuel to 3 per cent fixing upper and lower limits (upper and lower caps).

Accordingly the dealers commission was increased with effect from 30-06- 2019 fixing the upper cap for 92 petrol at Rs.167 and lower cap Rs.117.

This means that even if the price of 92 petrol increases to over Rs.167 or decreases to below the limit of Rs.117 the commission will remain unchanged at 3 per cent, similarly for 95 petrol the upper cap was fixed at Rs.170 and lower cap Rs.128.

The price of fuel increased on 21- 06-2021 and the price of 92 petrol at Rs. 157 from Rs. 117 while 95 petrol was Rs.184 which has gone up beyond the upper cap of Rs.170.

However the CPC had paid a commission of Rs 5.52 per litre of 95 petrol at 3 per cent of Rs.184, although it should have been Rs.5.10.

The overpayment totalling around Rs.4 billion had been paid during the period of 11-06-2021 to 15-07-2022, the Auditor General’s inspection report revealed.

When 92 petrol was priced at Rs. 470 per litre, CPC paid Rs. 14.10 in commission per litre whereas, according to the fixed upper limit cap price, it should have only been Rs.4.86.

The CPC has initiated action to recover this money from dealers in four installments by issuing a circular on 10-03-2022, a top official of the CPC said. He added that four dealers filed a petition at the Colombo District Court to find redress on the payment and Court issued an interim injunction restraining the payment to CPC and later it was revoked on 15-07-2022.

The official noted that the court had also granted approval to claim the overpaid commissions from all its dealers in Sri Lanka.

With this court order, the CPC will be able to recover Rs. 4.3 billion from roughly 700 fuel stations and save a minimum of Rs. 50 million on a daily basis, he pointed out.