Fuel: Discussions on pricing formula continues | Sunday Observer

Fuel: Discussions on pricing formula continues

The much anticipated fuel pricing formula has not been finalized as yet to bring in a cost-reflective and transparent pricing mechanism for fuel in line with global prices, a top official of Ceylon Petroleum Corporation (CPC) told the Sunday Observer last week.

He said nothing has been finalized as yet as the government will have to work out the final pricing system based on international market prices.

CPC Chairman Dhammika Ranatunga said discussions in this regard are continuing and a final decision will be reached on how the government wants to base the prices.

“There will be a decision in regard to the pricing formula soon and it will not be delayed as it has been in the pipeline for sometime,” Ranatunga said.

However, energy sector experts said the pricing formula which is transparent and reflects global oil prices must be implemented without further delay and above all it should bring about a win win situation to the suppliers and consumers. Regarding continued losses incurred by the CPC, Ranatunga debunked such claims as totally false and questioned as to how those who want to fix prices could accuse the CPC for loss making. “How could we run a business if someone else is deciding what price we should sell the goods. The Treasury is not paying the subsidy to us. However we cannot stop our operations because the Treasury is not fulfilling its obligations,” Ranatunga said.

The Treasury owes US$ 2 billion for the past 10 years as subsidy to the CPC. Besides the non payment of the subsidy the CPC is being slapped taxes amounting to around 40 percent, the CPC chairman said.

The Treasury secretary was not available for comment.The fuel pricing formula was scheduled to be in operation from May 1 following Cabinet approval. According to experts it is unlikely that the formula will be finalized before the 1st of May. However, the price of a litre of diesel was increased by Rs. 5 and petrol by Rs.9 by Lanka IOC last month. The CPC has been maintaining its current prices despite the revision by its competitor, incurring losses amounting to around Rs. 33 million a day according to media reports. The global price of oil hit $ 70 a barrel for the first time since December 2014.