CPC and LIOC sell petrol at 5 rupee price difference
Global crude oil prices are crashing to high levels amidst the COVID-19 crisis but Sri Lankans will not benefit from it as Sri Lankan and Indian fuel retailers maintain different prices not commensurate with world price fluctuations.
Amidst massive accumulated operational losses, Ceylon Petroleum Corporation (CPC) is compelled to keep the petrol price (LP 92) fixed at Rs.137 per litre for one year on the present interim government’s policy decision.
This petrol price is being maintained irrespective of the increasing or decreasing fuel prices in the world market, in an effort to set up a Rs. 200 billion Petroleum Stabilisation Fund, a senior CPC official said.
The fund will be built with the savings from the decreasing fuel prices in the world market within a period of six months. An additional tax has been imposed on petroleum imports to gain a profit margin for the government.
The CPC has lost around Rs. 12 billion since the suspension last December 2019 up to January this year and it has been able to save Rs.76 billion during the past three months, provisional estimates revealed.
Brent crude oil price has dropped by 60 per cent now compared to the price in January, a market analyst report revealed pointing out that the LP 92 now priced at Rs.137 per litre could be sold at Rs.55.
Similarly the price of a litre of diesel could be brought down to Rs. 42 from Rs. 104 and kerosene to Rs. 28 from Rs.70, the report said.
However the benefits that will accrue from low cost of imports of fuel will be transferred through adjustments in the price of essential food items and credit support to businesses creating a better multiplier effect in the economy, Treasury sources said.
The Finance Ministry has increased import duty on fuel for two months from April 23. Customs general duty on Octane 92 was hiked to Rs. 50 from Rs.38.
Under this setup, Lanka IOC has decided to revise the price of petrol (LP 92) fixing the price at Rs.142 per litre from Rs.137 rolling back the reduction of Rs. 5/litre made on April 6.
Considering the sharp reduction in international oil prices during March to April, the Customs duty including surcharge applicable on import of petroleum product was increased on March 14 and followed by a further revision on April 23.
However, international prices have considerably increased since then by more than 100 per cent, an LIOC spokesperson said
The petrol price as of now was at US$ 31.5/barrel in the international market against $ 14.6/barrel on April 22, he revealed.
He further said that therefore they were compelled to withdraw the previous price reduction of Rs 5 per litre on LP 92 petrol.
The LIOC had suffered a loss of Rs. 346 million during January-March quarter of fiscal year 2019-20. “We are very optimistic that the current duty structure will be reviewed at the earliest in view of an increase in international prices,” he added.