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A man waits inside a three-wheeler near a line to buy petrol from a fuel station, amid the country's economic crisis – Reuters
By Charumini de Silva
The Government yesterday sharply increased fuel prices triggering a one off domino effect on other goods and services forcing further agony to people already suffering from severe shortages.
The move meant all kinds of fuel is now priced above Rs. 400 per litre.
As per the latest price revision of Ceylon Petroleum Corporation (CPC), a litre of 92 Octane petrol has increased by Rs. 82 to Rs. 420, while 95 Octane petrol up by Rs. 77 to Rs.450, auto diesel up by Rs. 111 to Rs. 400 and super diesel up by Rs. 116 to Rs. 445.
The Lanka IOC also announced that it has decided to increase fuel prices from yesterday to match the CPC rates.
This is the fifth time the CPC revised prices, while it is the sixth time LIOC announced upward revision during the past five months.
Analysts opined the move will further aggravate the rise in cost of living amidst the worsening economic crisis, though it would make institutional sense in terms of fiscal management.
Justifying the decision to revise fuel prices, Power and Energy Minister Kanchana Wijesekera said it was an effort to minimise the losses incurred by the CPC.
“The fuel price revision is important to ensure the sustainability of the CPC as well as to import next fuel shipments to meet the demand. Even after the price revision, the CPC incurs a rupee loss for a litre of 92 octane petrol and 60 cents for every litre of Auto diesel,” he said at the post-Cabinet meeting media briefing yesterday.
He said they estimate around $ 530 million or Rs. 200 billion is required to import fuel in June.
“The Central Bank Governor has informed us that it is critical we at least cover up our costs to secure a continuous operation. Right now our income is around Rs. 75 billion, whilst the cost is Rs. 200 billion – reflecting a difference of Rs. 125 billion. Printing money is not a solution at this juncture,” the Minister said.
Pointing out that providing kerosene at a concessionary price had led to massive losses in CPC, the Minister said despite their request to increase prices neither the President nor the Prime Minister agreed to it, as fishermen, plantation workers and low-income families were heavily dependent on it.
As per the pricing formula, Wijesekera said CPC incur a loss of Rs. 275 per litre on kerosene, to be sold on concessionary price at Rs. 87.
He also claimed that buses and other modes of transportation services are mixing kerosene with diesel. The Minister urged authorities to conduct random emission tests, adding that buses always make money by passing on the price hike on passengers, whilst using kerosene provided at concessionary prices.
“Often people inquire how CPC incur losses, whilst LIOC does not. LIOC does not sell kerosene. They also sell other premium products which have a higher mark up. CPC also supplies to State-run institutes such as the CEB, CTB, CGR and other Government agencies which owe huge sums of money to the CPC and the staff numbers are staggering too,” he explained.
Minister Wijesekera revealed that national carrier – SriLankan Airlines has a long overdue bill of staggering $ 300 million to CPC.
He said the price revision includes all costs incurred when importing, unloading, distributing to filling stations including taxes, assuring that profits have not been calculated or included.
Despite having to incur huge costs to pay as demurrage fees to certain vessels for delays in payment arrangements, Minister Wijesekera assured those costs were not taken into account in the new prices announced yesterday.
“We have submitted our shipment schedules to the Central Bank and the Finance Ministry to avoid such unfortunate situations in future. It was not intended,” he pointed out.
The Minister said it was impossible to give a timeline on ending the queues, as people are hoarding stocks.
“I request people to avoid buying fuel from third parties and encourage hoardings,” he appealed.
