CPC to adjust fuel prices daily from next year
If the Ceylon Petroleum Corporation (CPC) has its way and the government concurs, prices at the pump next year would be subject to daily changes instead of the current monthly changes.
The daily automated fuel price revision system will be enforced next year with a view of resolving debt overhangs and low efficiency CPC petrol stations.
With retail fuel and electricity prices generally set below cost-recovery levels on a discretionary basis, the CPC has made losses for years, an IMF economic reform programme report revealed.
These losses have been treated as off-budget subsidies, financed by forex loans from state-owned banks to the CPC (accumulated to 3.8 per cent of GDP at end-2022), it added.
The dynamic fuel pricing a common practice internationally will replace the monthly fuel revision system in accordance with the pricing formula now in force using fortnightly average, international oil prices and rupee- US dollar fluctuations.
The daily price change will remove the high hike in rates that need to be effected at the end of the month and consumers will be more aligned to market dynamics, a high official of the Power and Energy Ministry said.
CPC fuel filling stations will be automated to automatically update centrally, besides technology also provides to schedule the oil price change at midnight, he said adding that the new system will be implemented in selected petrol sheds as a pilot project.
At the non-automated petrol pumps, dealers would get the updated price by way of four customised SMS’, e-mails, mobile app and web portal.
These means of communication are also available to dealers of automated petrol pumps,” he disclosed
Dynamic or real-time pricing implies that the cost of a product is kept flexible. The price of fuel varies, depending on Singapore FOB price, currency exchange rate and several other variable factors.
The fuel pricing model is mainly based on Singapore FOB price (US$/bbl) + freight/loss/insurance (US$/bbl) which is the CIF price ($/bbl) and currency exchange rate (Rs/ $)/litres per bbl equivalent to CIF price (Rs /litre).
One barrel of crude oil contains about 160 litres of oil priced in US dollars. To calculate the price, US dollars are converted to Sri Lankan rupees and then divided by 160.
The landed cost (jetty pipeline charges, +port development levy +LC charge ), taxes (excise duty, customs duty, and other levies including VAT) , CPC/ LIOC finance charges, CPC/, LIOC wholesale costs, CPC /LIOC margin, marketing/ distribution costs and, dealer discounts are the other factors contributing for the determination of consumer retail price.
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