Energy Minister calls on Finance Ministry to remove taxes on fuel

Saturday, 19 February 2022 02:23 - - {{hitsCtrl.values.hits}}

Energy Minister Udaya Gammanpila

Treasury receives Rs. 368 m daily income from taxes on fuel
CPC incurs a loss of Rs. 551 m monthly so far on top Rs. 83 b in 2021
Minister Udaya Gammanpila warns oil shortage in near future inevitable
Points to a letter by CBSL Chief informing inability to release foreign reserves for oil imports
Confirms $ 500 m Indian credit line will only be available from April

Energy Minister Udaya Gammanpila yesterday said he had made a written request from Finance Minister Basil Rajapaksa to remove the taxes imposed on imported fuel and to increase prices.

“The request was made after considering the difficulties faced in carrying out operations at the Ceylon Petroleum Corporation (CPC), and its continuous loss making streak,” he told journalists yesterday.

He said the world crude prices have increased to an all-time high of $ 19,286 per barrel, adding that the Finance Ministry has been informed on the rising world oil market situation, but the Ministry is yet to respond.

As per the data shared, the CPC at present suffers a loss of Rs. 551 million monthly on top of Rs. 83 billion last year.

The Minister noted that the CPC pays tax of Rs. 42 is imposed on a litre of 92 Octane Petrol, Rs. 64 on 95 Octane Petrol, Rs. 17 on diesel and Rs. 39 on Super Diesel. Thereby, the Treasury receives Rs. 368 million on a daily basis as taxes from the CPC.

Minister Gammanpila said that even if the Government provides concessions, the CPC will have to increase fuel prices adding that it would be the highest price hike in the history of Sri Lanka.

“Being one of the largest debt-ridden State entities, the CPC has informed the Ministry on a number of occasions that it cannot continue operations without a price hike,” he said.

At the current prices, Petrol is incurring a loss of Rs. 19 per litre and Diesel Rs. 52 per litre.

He explained that failure to remove taxes or increase prices will lead to an acute fuel shortage in the near future.

“It is inevitable to avoid an oil shortage in Sri Lanka in the near future,” Gammanpila said.

Minister Gammanpila also said the Central Bank Governor informed him in writing last month, that the bank is unable to release funds to import fuel, owing to the escalating foreign exchange crisis.

He clarified that the $ 500 million credit line from India to CPC, will only be active from April.

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