There has been so much talk, promises, statements and undertakings given by those responsible to ensure reasonable prices in the Power & Energy sector for so many years but unfortunately there has been no meaningful effort made to bring down prices or monitor price fluctuations effectively to ease the plight of the people.
We have not yet found any oil resources which can bring relief to us but it is encouraging to note that some positive steps are being taken in the right direction to identify such resources and go for oil drilling in selected areas with foreign assistance and investment.
The time spent on this is a matter of concern as I remember that the initiatives were taken as far back as 2000 when such possibilities were explored .
I still remember the first promotional event we had in Dallas, Texas in the US in 2001. So much water has flowed since then but we have not yet commenced any technical operations nor have we finalized plans where we could make some practical projections on the future of our petroleum upstream business.
Recently it was revealed that though hundreds of companies had expressed interest in Sri Lanka’s oil exploration only three companies have submitted six bids and of this two were Indian companies. Therefore the reasons why others don’t bid needs further examination.
Before we award any licensing rights, an independent committee of experts should be asked to look into all aspects of costs, security, maritime border problems and maximization of profits in our favour, etc and on such recommendations made only the finalapprovals should be given by the appropriate authorities to commence operations.
There is another dangerous trend developing in the Power & Energy Sector in this country as we are always told that oil prices have to be increased according to World market prices.
This seems to be a ready excuse to jack up the prices of fuel and energy by the Ceylon Petroleum Corporation (CPC), Lanka IOC (LIOC) and the CEB.
Is this the only thing these giant corporations can do to give relief to the suffering masses? What about the so many initiatives and controls they are expected to take in effective monitoring of the following:
- = Waste of fuel lost in the pipelines, transportation, and storage?
- = Regular maintenance of equipment needed to prevent such waste
- = Unnecessary waste of fuel on official transportation that could be reduced
- = Waste and corruption in siphoning of fuel by illegal means
Just imagine even a minute, the percentage of fuel going waste due to the above reasons, lying undetected for months and longer periods? What a difference it can make?
There were so many oil leakages reported in the newspapers which had resulted in great losses to the country in the past.
The CPC once made an analysis of the world market prices, calculating the actual selling prices over a 5-month period from Jan – May 2007 and this was published.
According to this study, CPC’s calculated retail price of petrol was more than double the actual cost price of a litre of petrol while the calculated retail price of diesel was also 50% more than the actual cost price.
The April 2007 price of a barrel of petrol was US $ 82.69 = Rs. 9095.90 =Rs.43.30 per litre. A barrel of diesel was US$ 81.15 = Rs.8926.50 = Rs.42.50pl.
But the CPC’s calculated average prices were Rs.99.36 and Rs.65.03, respectively.
Therefore it is crystal clear that the costs that get added to the actual cost price of the fuels are all taxes and administrative costs.
Is it reasonable to add so much cost to the actual cost of a product and make it unbearable or unaffordable to consumers?
In the light of above the age old arguments of:
- Diesel and kerosene having to be subsidized needs to be reviewed realistically.
- Raising prices on world market prices should also be reviewed and monitored efficiently as it should relate only to the actual market price increase component and not include any other cost components.
- There is a need for a thorough study with the whole price mechanism determining the final pricing of fuels affecting all types of consumers.
- It is observed that in the power sector too discriminative practices occur. For example the CEB purchasing electricity unit at Rs.9.65 and selling a unit at Rs.8.50 for industries and at Rs.8.10 to tourist hotels, while the sale price of a unit of electricity to an average middle class householder consuming over 180 units is billed at Rs.12.44 per unit.(This was in 2007 and now the prices are much more.)
- Adding insult to injury the CEB is announcing further price increases from next month where electricity becomes a luxury than a necessity.
- Is not the CEB aware that already they have placed Sri Lanka at the top in the highest electricity rates in Asia and second place in the world?
- New thinking and strategies are essential to avoid consumers being pushed further to bear the CEB’s high costs of operations.
Therefore it is high time that the current pricing formulas and systems in the Power and Energy sector are reviewed.
If not done early, these corporations will give more and more ‘HEADACHES’ than ‘RELIEF’ to consumers and it will reflect badly on the President as the present trends on consumer pricing negates the expectations of ‘Mahinda Chintana’.
(The writer is a former General Manager – Shell Gas Lanka Pvt Ltd and Colombo Gas Co Pvt Ltd, and also Director/Deputy Chairman –CPC). |
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