Sri Lanka seeking to increase fuel prices

The Ceylon Petroleum Corporation (CPC) has suggested to the Energy Ministry to increase fuel prices due to escalating world oil prices unless the Treasury provides some concessions, a senior official of the ministry, who wished to remain anonymous, disclosed.

Increasing fuel prices is the only option for the urgent need to control the domestic demand for fuel in the face of the foreign exchange (forex) crisis that the country is faced with at present, the official said adding that the demand for fuel is expected to increase with the relaxation of COVID-19 mobility restrictions.

The debt-ridden CPC is exploring every possibility to obtain local or international loan facilities to settle its fuel bill and debt servicing for bank borrowings.

The reason was the depletion of foreign reserves in two state banks and its inability to show its US$ allocations for LCs opened on behalf of CPC, a Treasury official said adding that the CPC owed $3.3 billion to these banks.

The Central Bank is also in favour of this proposal to increase fuel prices as the expected foreign funding to find necessary dollars has still not materialised, informed sources said.

The proposal is to be submitted to the Finance Ministry and Cabinet Sub-Committee on Cost of Living as there will be a gradual recovery of economic activities with the rise in domestic demand for oil which is likely to increase the import bill and thereby can inflict further pressure on the currency, the sources said. (BS)