Feud over fuel pricing formula

Thursday, 11 October 2018 00:00 - - {{hitsCtrl.values.hits}}

By Ashwin Hemmathagama –

Our Lobby Correspondent

Prime Minister Ranil Wickremesinghe yesterday cautioned the nation to prepare to bear the adverse impact from a possible increase of oil prices in November.

The increase is likely due to the US enforcing restrictions on Iran, the ongoing excise duty disagreement between US and China, and the annual demand for oil with the winter season, which will last until mid-2019.

Responding to a question raised by Chief Opposition Whip JVP MP Anura Dissanayake, the PM explained the macro-economic factors considered in deciding the retail prices of fuel.

“The new method to use the fuel price formula was introduced on 11 May. The Cabinet appointed a committee on 10 July to revise the retail price of fuel. The respective committee factors in the landing costs and operational costs in deciding the fuel price. Globally the oil prices change daily. We proposed the use of the new method, which would pass the benefit of the fluctuations to the public. The oil price fluctuates daily in India. Some countries revise prices every month. Platts prices on international oil price is also considered,” said PM Wickremesinghe.

“Today a barrel stands at $ 80. The anticipated sanctions on Iran in November may impact the oil prices. The use of oil will go up till next April due to the winter season. Companies in Europe have started to express their concerns on the purchasing oil from Iran. The global issues play a major role in the oil price. Nobody can predict the future of oil prices. The tax issue between the US and China will also another important factor in this matter. Taxes are imposed by all countries regardless of manufacturing oil or refining at home,” he added.

However, MP Dissanayake who was unable to get the Government to table the formula in Parliament for the information of the public, said: “A request to obtain this formula under the RTI was also rejected. The Finance Minister expresses that he is not aware of the factors of this formula. The Government is not tabling this formula but keeps deciding the oil prices. People are expected to bear the price fluctuations but are unaware of the formula used to take the decision.

“The landing cost of a litre of petrol remains at Rs. 81. PAL tax of Rs. 6.12, Excise Duty of Rs. 27 and Customs Tax of Rs.35 is added per litre. A litre of diesel is levied a tax of Rs. 34.58. If the dollar is going up, you could change the tax to keep the price stable rather than increasing the price.”