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Fuel pricing formula to keep in step with international market rates
Government will next month introduce a pricing formula for fuel where prices will vary according to international market rates, said Power and Energy Minister Champika Ranawaka.
He said that fuel prices in the international market have been dropping since March last year, but the benefit had not been passed onto the consumers.
He explained that the objective of this scheme was to ensure that consumers benefit when there is a reduction of prices, while the Ceylon Petroleum Corporation (CPC) does not suffer losses in the event of an increase.
“In the past, the premium for fuel purchases had been increased and hence, the burden had been passed on to the consumer. For instance, a premium of US$ 1 had been added to each barrel of imported fuel,” he said.
“If there is an import of 4 million barrels, the additional premiumof US$ 40 million will accrue to a third party. This money did not even reach the CPC,” he said.
Meanwhile, he said investigations have revealed that the CPC and the Ceylon Electricity Board were compelled to take loans from State banks at a high interest rate of 15 per cent, to compensate for loans given to the Road Development Authority’s (RDA) road construction projects, at a lower interest rate of 8 per cent.