News
Simmering disputes behind no-fuel boards
View(s):- Shed owners in crisis as CPC demands upfront cash payments
By Chrishanthi Christopher
The sudden appearance of no-fuel boards from time to time at fuel sheds indicates that all is not well with the country’s fuel distribution system despite the government’s claim that the QR code system is working smoothly.
Such boards appeared this week, too, when some shed owners refused to fill up their bowsers in protest against the Ceylon Petroleum Corporation’s decision to deduct a commission from the payment they made to obtain fuel.
In an earlier decision to find funds to purchase its monthly quota, the CPC introduced a 45% commission on its 225 distributors who are known as Corporate-owned Dealer Outlets (CODO).
A CPC shed that could not replenish its stocks due to the CPC's new payment rules. Pic by Akila Jayawardana
The CPC had sent notices to CODO, saying it intended to charge an additional 35% on the dealer margin given on fuel. The CPC says the commission was charged only from shed owners who operated sheds on CPC land.
Agitated CODO members this week presented their case to the Energy Minister leading to the CPC deferring the implementation of the decision.
However, another dispute between the CPC and shed owners continues to simmer. It is over the CPC’s decision to demand cash payments upfront from some 1,200 fuel station operators. This caused an interruption in the fuel distribution chain last week, with sudden long queues seen at filling stations.
Shed owners said they were unable to comply with the CPC’s insistence that they pay upfront cash payments at the time of placing orders.
In Puttalam, shed owner Fazal Abuthahir said the CPC requirement meant that they had to be ready with cash for the next bowser-load while the previous stocks had not yet been sold.
He said the orders have to be placed early with the CPC to have the load delivered on time to replenish the tanks. “The new requirement means that we have to invest double the amount on bowser loads. This has created a strain on our business,” he said.
He pointed out that as a result of the new requirement, several fuel stations could not replenish their stocks and had to close down their sheds for at least two days a week.
The fuel distributors Association said the CPCs decision would result in a number of shed owners winding up their businesses.
An association spokesman said that in terms of the practice that had been followed for decades, the CPC would give time for shed operators to settle their bills and accept cheque payments. But with the new requirement, shed owners are forced to borrow money from lenders at high-interest rates, he said.
Bank interest rates on loans have increased threefold in recent months up to 34%, making it unprofitable to continue the trade with such loans, he said.
“We will be forced to end our contracts with the CPC and join the proposed new companies which we hope will give us a better deal,” he said.
However, the CPC said the corporation had been compelled to adopt the practice as its suppliers insist on upfront payment when placing orders.
Chairman Mohamed Uvais said the CPC had exceeded its borrowing limits at state banks and now had to find the money for purchases from other sources.
“The world fuel prices are also high and we have to find around US$ 600 million for a month,” he said.
The chairman said the CPC’s regular suppliers who earlier gave one to two months of credit were now refusing to extend that facility. “The country’s credibility is low and our ratings have gone down,” he said.
He said shed operators had enjoyed the CPC’s credit facility for decades and it was now time for them to reciprocate the largesse and cooperate with the CPC.
Responding to shed operators’ claim that they would wind up and join new companies that would give them a better deal, the chairman said, “They are on an agreement and need to get the Board’s consent to move out.”
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