Fuel prices likely to soar
- LIOC strikes fresh deal with government
Fuel prices are likely to go up with petrol probably
shooting above the Rs. 100 mark after an imminent new deal between
the Lanka-Indian Oil Company and the government.
The LIOC and the Ceylon Petroleum Corporation
will reach agreement on marketing fuel at the same prices under
a new deal to be finalised within the next two weeks, LIOC Managing
Director K. Ramakrishnan said.
This is in contrast to earlier government claims
that the CPC will not be forced to market fuel at the same price
as LIOC after lifting the government-controlled price formula system.
The fresh agreement between the LIOC and the Treasury
is to be signed after the government decided that no more subsidies
will be paid to the Indian company and instead it could decide on
the prices.
LIOC has said it will fix fuel prices according
to world market rates and over the weekend – with the volatile
West Asia at a flash point – world crude oil prices soared
to their highest rate of 78 US dollars a barrel. According to what
Mr. Ramakrishnan says the CPC also will fall in line with the prices
fixed by the LIOC.
Mr. Ramakrishnan said the company had reached
agreement on the particular clause with the government and this
would mean the LIOC and the CPC would be selling fuel at the same
prices.
Mr. Ramakrishnan said the LIOC had pointed out
that the original agreement stipulated that a level playing field
should be provided –meaning that both companies should sell
fuel at the same prices. This in turn would mean that if the LIOC
increased its prices, the CPC-run fuel stations would also have
to increase their prices.
Petroleum Resources Minister A.H.M. Fowzie said
he was not aware of the details of the agreement to be signed as
the Treasury was finalising it. However Mr. Fowzie had earlier said
the CPC should be able to determine its own prices and that the
LIOC could determine its own prices.
Treasury Secretary P.B.Jayasundara when contacted
by The Sunday Times said he was out of the country and could not
comment on the issue till he came back. The controversy over fixing
fuel prices came up after the LIOC insisted that the government
should pay an overdue subsidy amounting to Rs. 7,000 million. The
money was overdue from January 2004.
The government agreed to pay part of the disputed
subsidy immediately and the rest in the form of Treasury bonds.
These developments came as the JVP-backed trade unions held a protest
outside the Kolonnawa oil refinery on Friday, accusing the government
of indirectly giving LIOC a monopoly role in fixing fuel prices.
For the past two months, some 160 filling stations
selling LIOC fuel have been virtually shut down due to the dispute
over subsidies. With a settlement reached, Mr. Ramakrishnan said
yesterday that LIOC filling stations would get supplies from next
week. |