Sri Lanka’s fuel pricing formula comes into effect in May

 
Sri Lanka is set to introduce a cost-reflective transparent fuel pricing, based on international market prices, next month. This new transparent mechanism will be submitted for cabinet approval in the next two weeks, Finance Ministry sources disclosed.    
 
In this much-delayed fuel pricing formula, prices would change with international market prices similar to many other commodities people consume, a senior official of the ministry said adding that it could be implemented with effect from May 1 following the cabinet approval.  
 
There was also a strong case to gradually introduce corrective taxes to both petrol and diesel to account for externalities, this can be done with increments of Rs. 0.5 a litre per month so that the consumer will not feel the effect of these revisions, he pointed out.
 
The government was to introduce this fuel pricing formula last month in accordance with a prior commitment made to the IMF, but it had been delayed due to political upheaval faced by the ruling coalition.
 
Lanka IOC recently increased the price of a litre of diesel by Rs. 5 and petrol by Rs.9. But the Ceylon Petroleum Corporation continues to sell fuel at the current price while incurring a daily loss of Rs.33 million due to oil price fluctuations in the world market. (Bandula)