CHENNAI, November 7: The Centre's decision to increase commission on sale of LPG cylinders has evoked mixed reactions from LPG distributors. "We are glad that the government has announced an upward revision in commission rates. But, the increase is far below our demands. Moreover, we were also demanding commissions based on ad valorem concept,'' president of the LPG Distributors Federation of India L Munivelu told The Financial Express.

On Thursday, the Union government fixed distributor's commission on the sale of a 14.2 kg cylinder at Rs 10.50. While the commission for high capacity cylinders will be proportionately higher in relation to the 14.2 kg cylinder. However, the price revision will have no impact on customer price.

In percentage terms, the hike works out to 1.6 per cent. With the revised commission, distributors in Chennai, for example, will get a net commission of 7.2 per cent on the sale price of Rs 145.05 as compared to 5.6 per cent earlier. The federation had demand a net commission of 20 per cent ad valorem and might have actually settled for even 10 per cent.

The hike has been given in order to "improve customer service." The dealers have also been asked to pay minimum wages and statutory benefits to their staff.

Similarly, LPG distributors will have to continue home delivery. In case this service cannot be provided, customers will get a rebate of Rs 5, which will be lopped off from the distributor's commission.

Hailing the hike half-heartedly, Munivelu lamented that it took a year for the government to implement the recommendations.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.