Energy experts urge the authorities to base fuel price revisions on a formula and make changes in a transparent manner so that consumers are aware of the rationale for the revision.
Fuel prices were revised suddenly when global prices were on a downward trend last week adding on to the burden of people who were already saddled with a high cost of living.
International energy specialist, Dr. Tilak Siyambalapitiya said fuel prices must be set transparently, or based on a “fuel pricing formula”, however unpopular it may be.
Then, price movements will be smaller, and would be both up and down. Components of the price (import cost, insurance, port levy, duty, pipelines, tanks, taxes, filling station margin, even the provision for evaporation) will be visible to all.
He said the price should be set as an upper bound, allowing retailers to compete by offering discounts, within a price band. They can offer facilities (eg. free quick car wash and washrooms) to attract customers.
All political parties have flouted this grave need to establish a formula, publish the formula and its monthly calculations, and establish public faith in the pricing system, thus relieving the burden on CPC and banks, Dr. Tilak Siyambalapitiya said adding that funds that should be lent by state banks to SMEs for investments, are otherwise used to finance the gap between CPC’s cost and price.
Banks are indeed happy while CPC is blamed for financial losses.
There is no purpose served in blaming CPC tomorrow for making losses, when today, all political parties alike say, fuel prices must not be increased. CPC staff are the happiest, because CPC is defined to be loss-making; then there is no need to perform better.
He said to provide help and subsidies to low-income families, there are other procedures, which should be strengthened.
However, the price at the pump has to be professionally calculated, not by Treasury officials who are politically appointed or by politically appointed other Commissions of various descriptions, Dr. Siyambalapitiya said.
Responding to price hike queries in Parliament, Minister of Energy, Udaya Gammanpila had said a price formula should be followed urgently if a stabilisation fund is not maintained.
Opposition parties too have been calling for a pricing formula that had been adopted in the past where fuel prices adjusted in a rational and transparent manner.
They said the price of petrol would have ranged from Rs. 130 to Rs. 140 had the fuel pricing formula been in force. The CPC and Lanka IOC revised petrol and diesel prices last week to minimise losses.
However, price revisions took place when the government said it would be negotiating credit lines with India and Oman for fuel purchases.
The state entity CPC revised the price of petrol by Rs. 20 and diesel by Rs 10 to Rs 177 a litre of petrol and diesel to Rs 121. The price of 95 Octane Petrol was raised by Rs 23 to Rs 207 a litre.
Energy experts said prices shouldn’t have been raised when global prices had plunged due to concerns over the new Omicron strain.
The sudden hike in fuel prices as aggravating the plight of low income families who had been leading a hand to mouth existence battered by the global pandemic for nearly two years.