Cabraal claims Govt. short on public goodwill for fuel pricing formula

• Says Govt. lost opportunity to implement transparent price formula in 2015 when global prices were low 

Former Central Bank Governor Ajith Nivard Cabraal yesterday said the Government lost out on a chance to implement a transparent fuel pricing formula in 2015 when global prices were lower and was now struggling to raise prices through a transfer system as it risks public ire through an outright increase.  

“This Government is very good at hiding. They want to increase the price but they want to hide behind the formula. If the Government wishes to increase the price of petroleum, they can do it now and they do not need a pricing formula,” he told reporters in Colombo.

The Government committed itself under the structural benchmarks of the $ 1.5 billion International Monetary Fund (IMF) Extended Fund Facility (EFF) to introduce a pricing formula for fuel by the end of last month. However, the formula is still being hashed out by the Treasury and the Ceylon Petroleum Corporation (CPC). 

Cabraal questioned as to why the Government did not consider implementing a pricing formula when oil prices were lower or before the Central Bank decided to follow a flexible exchange rate policy.

He pointed out that the Government was struggling to get the public to buy into a price increase in fuel as increased taxes and slow growth had hampered the ability of the public to absorb increases in the cost of living.  

“They can’t absorb costs for too long and now it is a matter of time before they have to make an increase. The Government doesn’t have the goodwill to take the decision. The Government is so close to being checkmated by the IMF and there is nothing we can do about it,” Cabraal stressed.

Referring to recently released Central Bank Annual Report statistics, Cabraal said the Ceylon Petroleum Cooperation (CPC), which made a Rs. 45 billion profit in 2016, has only made a profit of Rs. 5 billion in 2017. In addition, the Ceylon Electricity Board (CEB) also made losses of Rs. 45 billion last year.  

“The rupee depreciation and increased oil prices are now biting these institutions. In 2018, I am sure they are going to make losses,” he added.