The Petroleum Dealers’ Association has written to President and Finance Minister Anura Kumara Dissanayake seeking his intervention over changes to the fuel dealers’ commission calculation method and the reduction of commission payments. In a letter addressed to the President, the Association stated it decided to bring the matter to his attention after attempts to resolve the issue with relevant institutions including the Ceylon Petroleum Corporation (CPC) did not succeed. The Association noted that about 98 per cent of fuel dealers operate as individual or partnership businesses that have been built over generations or developed independently, with only a small number of appointments historically linked to political connections. According to the letter, CPC issued Circular No. 1109 on 25 February 2025, introducing a new commission calculation system that came into effect from 1 March 2025. This replaced the long-standing percentage-based commission structure with a tiered system where earnings per litre are capped within a fixed range.

The Association stated that under the revised structure, the income received by dealers is insufficient to meet staff salaries, loan repayments, and other operational expenses required to maintain filling stations. Many operators, particularly those with existing bank loans, are already facing difficulties in meeting financial obligations. It warned that a significant number of cooperative-run fuel stations could be forced to close if the current system continues, affecting both employment and local supply networks. The Association also highlighted that the new commission structure was introduced without prior consultation, noting that early engagement with industry stakeholders could have resulted in a more practical and sustainable framework.

Beyond the immediate concerns raised, industry stakeholders point to a broader structural imbalance within the fuel pricing system. While dealer earnings are now fixed within a narrow range, the Ceylon Petroleum Corporation operates under a cost-recovery pricing model in which its expenses are incorporated into the final retail price. This allows CPC to retain flexibility in its margins, while dealers must absorb all operational costs within a constrained income structure. This imbalance is particularly felt by CPC dealers. Dealers of private companies operating in Sri Lanka continue to earn a percentage of the sales price, typically around 3%, providing them with a more sustainable and responsive income. It is especially disappointing that the state-owned CPC, whose interests are meant to align with public welfare, has failed to provide a comparable arrangement, whereas private, profit-driven companies appear more considerate of their dealers’ financial realities.

The disparity is further reflected in recent financial trends. Following the fuel shortages and losses during the Sri Lankan economic crisis, CPC returned to profitability in the subsequent period. During the same time, fuel dealers experienced only a limited and temporary increase in earnings under the previous percentage-based system, much of which was offset by rising costs and low sales volume. Under the current fixed commission structure, dealers are finding that their returns are unsustainable in the long run.  Fuel dealers are also required to collect and remit Value Added Tax (VAT) on a product whose price is centrally determined, placing additional administrative and cash flow pressures on businesses that have no control over pricing. In addition, fuel must be purchased on a cash basis, meaning that increases in fuel prices directly raise the amount of working capital required to operate a station. As a result, dealers are required to invest large sums of money simply to maintain fuel stocks, and this requirement increases as prices rise. However, the income they earn per litre remains unchanged. While the business may appear viable on paper, in practice dealers face high operating costs, loan repayments, and daily risks. This creates a situation where more capital is needed just to maintain the same level of income, raising concerns about long-term sustainability. Industry stakeholders warn that if these structural issues are not addressed, the financial pressure on dealers could intensify to a point where maintaining regular fuel supplies become increasingly difficult. A continued lack of policy attention or reform may lead to a gradual breakdown of the dealer network, which could in turn disrupt fuel availability for consumers across the country. In its appeal to the President, the Association requested the appointment of an expert committee with extensive knowledge of the fuel distribution sector. It proposed that representatives from the Association be included in such a committee to help develop a sustainable solution acceptable to all parties.