Pricing formula sends fuel prices skyrocketing – The Island

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By Rathindra Kuruwita

The Cabinet has introduced a fuel pricing formula, Energy Minister Kanchana Wijesekera said at the post-Cabinet press conference.

Wijesekera said the need for a fuel pricing formula has arisen due to the current crisis.

“When the previous government introduced formula fuel, we were in opposition and we were critical of it. However, a pricing formula is essential, he said.

With the implementation of the fuel pricing formula, the fuel price would be changed once every two weeks or once a month as needed, the minister said.

Minister Wijesekera said Sri Lanka needs about $530 million to import fuel for the month of June.

“However, lately, we have only collected about Rs. 75 billion Sri Lankan rupees per month. There is a gap of Rs. 125 billion. Central Bank or the Ministry of Finance. They will have to print money to help us. So, they asked us to cover our costs,” the minister said.

He said the cost of importing and distributing a liter of 92 octane petrol was Rs. 421.71 and at the previous price of Rs. 338, the Ceylon Petroleum Corporation (CPC) was losing Rs. 83.71 on each litre.

“We have increased the prices by Rs. 82. Even with this, we are incurring a loss of more than one rupee,” the minister said.

They were selling a liter of 95 octane gasoline at Rs. 373 while the cost of importing and distributing a liter was Rs. 444. “We have raised the price to Rs. 450 now,” did he declare.

The minister said the cost of importing and distributing a liter of automotive diesel was Rs. 400.60 and the price had been increased to Rs 400. The cost of a liter of super diesel was Rs. 444.94. With the increase of Rs. 116 per litre, the new price was Rs. 450.

“However, we are still selling kerosene at Rs. 87 per litre. The cost is Rs. 362.26 which means we are losing Rs. 275.26 per liter of kerosene sold. , but the president, the prime minister and some other ministers have said that kerosene is being used by several vulnerable groups and that we must not raise prices now,” he said.

However, there has been a lot of abuse involving kerosene, especially in the transport sector, the minister said. A significant number of buses now ran on kerosene, although they increased bus fares when diesel prices rose.

“We asked the Minister of Transport to check the emission certificate of these buses and identify if they used kerosene. People ask us how the Lanka Indian Oil Corporation (LIOC) makes profits when the CPC makes losses. It’s mainly because we sell kerosene, the IOC doesn’t sell kerosene. We also help government institutions such as Ceylon Electricity Board (CEB), Railways, Sri Lanka Transport Board (SLTB) and SriLankan Airlines. And the delays in payment are numerous. For example, SriLankan Airlines alone owes us over US$300 million,” he said.

The minister said they had spoken to the private bus and bowser associations and asked them to raise fares, based on formula pricing. Gas stations were also notified that their credit limit had been increased, he said.

“We have also asked petrol stations to increase the limit of fuel allocated to vehicles. Now petrol stations can pump fuel worth Rs. 2,500 to motorbikes, Rs. 3,000 to three-wheelers and Rs. 10,000 to other light vehicles. We will have to enforce these limits for a few more days. We also urge people not to hoard fuel as this will prolong the crisis,” he said.

The minister added that police raided places that were hoarding fuel and selling at higher rates. All service stations now have plainclothes and uniformed security force personnel to ensure the security of the institution and employees, he added.

“We also monitor people who join the queues, fill up and then take the fuel out to sell it on the black market. This happens especially at the IOC gas station in Narahenpita. We are monitoring this situation and soon severe measures will be taken against these people,” he said.


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