Petrol price fall ruled out

The Ceylon Petroleum Corporation (CPC) has ruled out an immediate price reduction in petrol after consumer expectations rose when VAT on petrol was reduced in this week’s budget.

VAT has been reduced to 5 percent from a current 15 percent to 5 percent on petrol effective from January 1, next year.CPC Chairman Asantha de Mel says the corporation is selling petrol at a loss of four rupees per litre and the fluctuations in fuel prices were mainly dependant on world crude oil prices.

“Even if the VAT reduction of 10 percent is applied today, the CPC has to sell petrol incurring a loss of two rupees per litre,” he said. The CPC chairman noted that the CPC is losing heavily on diesel and kerosene sales due to subsidised rates and there was no possibility of bringing down petrol prices. However he expressed optimism that world crude oil prices will come down by December and these benefits would be passed on to consumers.

De Mel said the CPC is in the process of computing on how to adjust the pricing of oil by considering the concessions granted by the government. But he emphasised that the price reduction in petrol is possible only if the government provides more subsidies to counteract rising oil prices.