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CPC overpays Rs. 4.5b in dealer commissions; audit query reveals
View(s):By Niranjala Ariyawansha
An overpayment of Rs. 4,574 million in dealer commission has been made to fuel shed owners from June 11 last year to July 25 this year by the Ceylon Petroleum Corporation (CPC) due to the non-implementation of a board decision to keep the commissions within a reasonable limit, a special audit query has revealed.
The audit query issued on August 4 pointed out that the overpayment was four times the CPC’s entire annual salary bill, including wages, allowances, overtime payments, and bonuses.
While the CPC has restricted the quantity of fuel issued to dealers due to the prevailing economic crisis, unwarranted dealer costs such as the overpayment of commissions would increase and add to the CPC’s financial burden once the country returns to normal and fuel restrictions are removed, a senior CPC official said.
He said the overpayment in dealer commissions as of today totals Rs. 7.5 billion (Rs. 7,500 million). This works out at Rs. 60-70 million a day. The total dealer commissions including the commissions for petrol, diesel, bitumen, lubricants, and agriculture products in the past five years, according to the audit query, are as follows:
2017: Rs. 10,995m, 2018: Rs. 13,541m, 2019: Rs. 14,132m, 2020: Rs. 12,402m, 2021: Rs. 14,486 m and 2022: an estimated Rs. 35,496m.
“Accordingly, the total estimated dealer commission for the next 12 months is highly significant and abnormal compared to the previous year’s average dealer commission expenses,” the audit query has observed.
This overpayment has to be borne by consumers, the official said.
Accordingly, consumers had to pay an additional Rs. 10 for every litre of fuel of any type they buy, the official said.
The special audit query was sent by Assistant Auditor General D.G.A.S. Anulasiri to the CPC on August 4.
Through the Board Paper 05/1231 of July 30, 2019, the CPC’s Board of Directors introduced an upper cap (maximum price) and lower cap (minimum price) for the 3% dealer commission. These limits were set to ensure that both the CPC and dealers received a reasonable dealer commission, even in the case of future fuel price revisions.
The audit query has exposed that the Board Paper had not been implemented and the omission resulted in CPC making an abnormal dealer commission overpayment of Rs. 75 billion since then. The increase is reported to be due to the fuel price increase.
On 18 January 2022, the CPC’s Deputy General Manager (Finance) was notified that dealer commission overpayments had been made in violation of the Board Paper. But top CPC officials alleged that the then DGM did not act immediately to correct the mistake. A decision was taken to implement the Board Paper from July 18, this year.
However, due to the fuel crisis that existed in the country then, a senior marketing officer on July 25 advised the CPC management to immediately suspend the upper and lower caps method. The then CPC Chairman approved this, subject to approval by the board.
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