Calculating Commission Fee for the Distribution of Gasoline and Gas Oil by Private Sector in Iran: A Proposal for Restructuring Iranian Petroleum Products Market

Currently, the distribution of various types of petroleum products is performed exclusively by the government. The high price of land in metropolitan cities and the lack of incentive for the private sector to invest in the construction of filling stations due to their low-income have caused filling stations not to be sufficiently available. One of the solutions to overcoming this obstacle is to use the ability of the private sector for the distribution of petroleum products. To reduce the government’s ownership, the market structure for petroleum products distribution in the country needs to be changed. This change should be firstly done gradually and step by step, and, secondly, the government has to monitor this issue at various stages. In this study, three stages are proposed for the market restructuring of the distribution of petroleum products in the country, and the conditions and requirements for each stage are separately identified. For the private fuel distributing companies, the most important problem is the economic issue of profitibility. On the other hand, since the product price is still subsidized in the country, it is indispensable that the amount of commission fee should be determined in such a way that the activity of private companies is economically justified. In this study, the amount of product commission fee is calculated concerning capital and operatational expenditures using the engineering economics method in different situations by employing COMFAR version 3 software. With regard to the various land prices in different places, the results of calculations show that the amount of gasoline commission fee varies from 6 to 12% of the current price of this product; the commission fee varies between 20 and 40% for gas oil.