Business group pans management of fuel market

There is widespread supply disruption mostly caused by the government’s management which allows distributors to pay retailers zero commission thereby robbing them of the motivation to sell, the business group has told the government.

Hundreds of retailers recently proposed to the government that it should fix minimum commissions.

But the Ministry of Industry and Trade rejected this in its latest bill, which retains the current mechanism of suppliers, distributors and retailers negotiating commissions between themselves.

But this leaves retailers at a disadvantage since they have to bear the losses if the government-mandated retail prices drop to a certain level, the VCCI pointed out.

A minimum commission is the key to resolving this problem, it said.

"Without such a mechanism, the government’s intervention in the market is half-baked."

Besides, while the government does not punish distributors when they stop selling, it penalizes retailers for the same offense, it said.

It also interferes with the freedom of doing business by setting the prices, it said.

Fuel distribution expenses, including for transportation, insurance and loan interest, have been rising since last year but have not been reflected in retail prices, it pointed out further.