Price war on staples gets multipronged Govt. strategy

By Uditha Jayasinghe 

The Government yesterday continued its war on the prices of essential goods by outlining plans to link 1,000 shops, including privately-owned supermarkets, to implement fresh price controls which will be announced today, and rolling out 1,000 new Sathosa outlets before 2017 end to sell staples at slashed costs. 

State Minister for Finance Lakshman Yapa Abeywardena told reporters at the weekly Cabinet briefing that the Government would implement a multipronged strategy to ensure that the price controls of staples would trickle down to consumers around the country. 

“We understand that for these price concessions to be truly beneficial to the people changes have to be done on several fronts. Sathosa will sell essential items at new prices and we are already in talks with key companies that operate about a 1,000 shops around the country, including large-scale supermarkets, to sell at maximum retail prices,” he said. 

As outlined earlier, the Government will also attach about 200 State officials at the provincial, local government and Grama Niladari levels to work with the Consumer Affairs Authority (CAA) to catch errant traders. However, new employees will not be recruited to this function, the Cabinet paper submitted by Industry and Commerce Minister Rishad Bathiudeen said but Abeywardena noted the number could increase to as many as 1,000. 

“The increase of VAT has been so politicised that people think all price increases are caused by it. But this is not the case. The Government has exempted 73 items from VAT but there is little awareness of this. Most people do not know their basic food items are not charged with VAT. We have to change this wrong perception,” he said. 

As part of the effort to get essential goods at the right price to consumers, the Government also plans to establish 500 Sathosa retail outlets this year with 1,000 more to be rolled out by December 2017. By the end of next year the Government estimates 2,000 shops around the country will be committed to selling staples at the maximum retail price imposed by the State. 

In August 2014 Lanka Sathosa obtained a bank loan of Rs. 14 billion to purchase 258,000 metric tonnes of rice, eventually spending Rs. 17 billion with port charges, demurrage, warehousing and transportation charges. However, the rice was not released to the market and over 3,000 metric tonnes were found to be unsuitable for human consumption. In March, Cabinet approved a Rs. 8.7 billion Treasury bailout for Lanka Sathosa. 

Responding to questions on Sathosa’s competency as a loss-making retail chain, Abeywardena acknowledged its financial problems but insisted that it could be used productively to create competition in the market to reduce prices. 

“There are many loss-making State enterprises but that does not mean the Government has discarded any of them. For example the Ceylon Transport Board (CTB) is also loss-making but it provides a service to the people.” 

On the confusion caused by Supreme Court decision to suspend the VAT increase on Monday, Abeywardena said that the Government would make a decision once they had received the written verdict from the court.