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CPC calls for fuel price increase; proposes more than LIOC hike
A second price increase of petrol and diesel within two weeks is expected if a request by the Ceylon Petroleum Corporation (CPC) to the Ministry of Finance is approved.
Following a price revision by the Lanka Indian Oil Company (LIOC) earlier this week, the CPC is expecting that approval is granted for it to increase prices and offset losses, CPC Chairman Sumith Wijesinghe said. The CPC’s price revision request has already been sent to the Ministry of Finance.
“Definitely, we will have to increase prices by more than the amount the LIOC did last week. Therefore, we requested in writing from the Finance Ministry through the Ministry of Energy on Thursday, to grant approval to increase prices higher than the current LIOC prices,” the chairman said. to increase fuel prices,” the chairman said.
Last week, the LIOC increased the price of 92 octane petrol by Rs. 07 a litre, raising the price to Rs 184 in its sheds. The price of 95 octane petrol was raised by Rs. 03 a liter with the new price being Rs. 213. Also, a liter of diesel has been increased by Rs. 3 raising the price to Rs. 124.
Mr Wijesinghe said that as a result of the subsidy on fuel, the CPC had to bear a loss of Rs. 6-8 billion last month and losses would be higher this month with some LIOC customers shifting to CPC sheds to buy fuel.
The move comes as the Central Bank has requested the CPC to raise the major part of its fuel bill which is expected to run into US$ four billion this year. It has been told to raise the funds through loans, credit lines, credit facilities or swap arrangements.
Accordingly, the CPC, through the Ministry of Energy, is expected to negotiate for US$ 1billion loan from China, Singapore or West Asian countries.
A 180-day credit facility from the Petro-China Company is due to end this month while the CPC is due to call for fresh tenders.
Meanwhile, the CPC debt crisis has worsened with USD 700 million required by the end of this month for fuel purchased so far, according to Energy Ministry Secretary K.D.R. Olga.
She said it was the responsibility of the Central Bank to provide to the banking system USD 700 million to be paid to the Bank of Ceylon and the People’s Bank.
“Yes we have faced a serious crisis. We used to ask earlier for dollars from institutions like the Ceylon Electricity Board (CEB), but now we have a serious crisis even regarding the rupee because the Bank of Ceylon and the People’s Bank are now issuing US dollars with a 100% cash margin,” she said.
According to her, the US$ 330 million due to be paid for the fuel purchased subsequent to opening LCs in June-July 2021 is due to mature by the end of this month. Another US$ 350-400 million has to be paid by the CPC at the end of this month for fuel purchases for February. The total is about $ 700 million.
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