ISSN: 1391 - 0531
Sunday May 25, 2008
Vol. 42 - No 52
News  

Skyrocketing CoL and a mega fuel price hike

  • Rising costs will lead to trade union action and political instability

By Nadia Fazlulhaq

This week’s diesel price increase by Lanka Indian Oil Company (LIOC) is already having an impact on consumers with further warnings that the cost of goods and services will be increased in the coming weeks. School and office van transport services rates are already being increased, transporters of goods and vegetables have decided to increase charges while private bus owners are also clamouring to raise bus fares after facing one of the biggest diesel price hikes.

Economist Dr. Ranjith Bandara warned that the oil price increase has a wider impact as the country uses fuel for many purposes such as transport and power generation.“This is like a cancer spreading to each and every sector. In our country where the use of public transport is very high, with nearly 90 % of the population using public transport”.

On the morning after Lanka IOC announced a rise in the cost of diesel many Ceypetco sheds bore the legend “diesel over”.

“We also use lorries for the transport of local commodities instead of using low cost transport like the railways. It will add pressure on inflationary trends and impact on the prices of commodities”. He said it would accelerate the already sky rocketing cost of living”.

The rising costs would lead to trade union action and demands for salary hikes which would lead to a rise in the cost of production and in turn lead to political instability Dr. Bandara said.

“Sri Lanka is moving towards an energy crisis as there is an over dependence on thermal power. It’s very important to search for alternative energy sources. Four percent of the GDP is consumed by the Ceylon Electricity Board (CEB), CPC, Railways and the Water Board. These institutions consume a lot of public money and increase the rate of public expenditure” he said.

Lanka IOC Managing Directors K. Ramakrishnan said that despite the price hike his organization was still incurring a loss.“We are running the fuel business at a loss, the price of petrol and diesel has risen. At present we are incurring a loss of Rs. 3/- on a litre of petrol and Rs. 23/- on a litre of diesel. Before the price hike we were losing of Rs. 43/- on a litre of diesel” he said.

He claimed Lanka IOC did not purchase fuel from the CPC, but purchased its requirement of fuel by importing directly. President of the Lanka Private Bus Owners Association (LPBOA) Gemunu Wijeratne said they had prepared a new fare policy which would be implemented within 24 hours of the oil price increase by the CPC.

“No sooner the CPC increases its oil prices, the amended policy which includes eleven factors other than the fuel will be implemented. Under the new scheme we are proposing an increase in the minimum bus fare to Rs. 10/-” he said. Siva, a petrol station attendant with around 18 years experience of working and presently employed in an IOC petrol shed said he has seen a huge drop in sales after the price hike.

“We usually sell around 2,800 to 3,000 litres a day, but it has now decreased to 600 litres per day ” he said. L.P. Ananda Gunapala, a driver of a long-distance bus plying between Colombo and Kurunegala said expenditure had risen to between Rs. 1,800/- to Rs. 2,000/- per day after the price hike.

“Not only the price of fuel has increased, but the price of vehicle parts too have been increased. It will be difficult to cover our expenditure without increasing the fare. In the alternative, government should provide fuel at concessionary rate to bus operators” he said.

A. Karunatilake, driver of a bus plying between Vavuniya and Colombo said that their daily cost is Rs.15,000/-, of which fuel costs alone totalled Rs. 12,000/-. He added most of the time buses were not filled to capacity which resulted in losses. Meanwhile school van drivers too have decided to increase fares. N.M.K. Harischandra, President of the Van Drivers Society at the Kynsey Road vehicle park said there were over 165 vehicles coming from various areas of the Western Province which utilise the park and have decided they would soon be increasing fares.

“Some of the children come from interior areas and roads on which there is no public transport, however we will have no choice but to increase the fare. We spend at least around Rs. 20,000/- for fuel per month or Rs.1,000/- per day. In addition the price of the spare parts too has increased” he said.

 
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