Cabinet nod for fuel pricing formula in principle

Thursday, 10 May 2018 00:00 - - {{hitsCtrl.values.hits}}

Despite a delay of two months, the Government finally proposed a pricing formula for fuel at the Cabinet meeting held yesterday.

“The proposal submitted by Finance Minister Mangala Samaraweera was approved by the Cabinet of Ministers yesterday,” a senior official of the Treasury told Daily FT. (CDS)

The Government was committed under the structural benchmarks of the International Monetary Fund (IMF) to introduce a pricing formula for fuel by end of March in order to obtain the third trench of the IMF facility.

However, the official asserted that the proposed pricing formula will be further discussed with the stakeholders on implementation.

When contacted, the Ceylon Petroleum Cooperation Chairman Dhammika Ranatunga said that they weren’t consulted in the proposed pricing formula.

“We just got to know that the Treasury has submitted a paper on the pricing formula, which we haven’t seen,” he added.

Petroleum Resources Development Minister Arjuna Ranatunga was not available for comment, in spite of many attempts.

The Ministry held several rounds of discussions with the Finance Ministry and Lanka IOC on increasing fuel prices but Ranatunga insisted that it was a decision the Government must make.

“This is a decision that the Government must make. They have to decide if they want to serve fuel at a subsidised price and serve a social obligation at a loss, or increase the prices, putting a burden on the general public. It is not something I decide,” he stressed, addressing a media briefing in March.

At that point, the Minister emphasised no initial steps had been taken to introduce a price formula to date, adding that the Government will arrive at a decision at the right time.

Nevertheless, Ranatunga said that he was personally not in favour of the idea of introducing a pricing formula for fuel.

“I personally feel there are institutions where the Government can make profits such as the port and the airport, and there are institutions where we should not worry about the profit but it should rather be a social obligation in serving the general public without burdening them.”