CPC loses Rs. 12 b due to suspension of fuel pricing formula

• Minister Gunawardana says formula good but badly structured and implemented
• CPC losses must be recovered before fuel costs can be reduced 

By Chandani Kirinde

The Ceylon Petroleum Corporation (CPC) has lost Rs. 12 billion since the suspension last December of the fuel pricing formula introduced by the previous Government, a senior Minister said. 

Cabinet Spokesman Minister Bandula Gunawardana

Cabinet Spokesman Minister Bandula Gunawardana said that the fuel pricing formula is good but the way it was formulated and implemented was wrong, and as there was opposition from the public to the pricing formula, President Gotabaya Rajapaksa decided to suspend it after he was elected.

He said given the perilous financial status of the CPC, the Government was unable to pass on the benefit of decline in oil prices globally until the Corporation can at least break even in its operation costs.

“The CPC is incurring loss of Rs. 9 per litre of petrol, a loss of Rs. 12 per litre of diesel, and loss of Rs 5 per litre of super diesel sold. We have to first cover these losses, and then we can consider giving people the benefit of lower fuel prices,” he added.

The previous Government implemented the cost reflective formula-based pricing system in mid-2018.

It was done as part of the structural benchmarks of the International Monetary Fund (IMF), to introduce a pricing formula for fuel in order to obtain the third tranche of the IMF facility.