State-owned Ceylon Petroleum Corporation (CPC) will gain billions of rupees in profits, despite assertions that it was losing money, from the sale of fuel at the new prices, however amidst owing billions of rupees to state banks from borrowings, reliable sources aid. .
The CPC owes Rs. 652 billion in loans to state-owned Bank of Ceylon and the People’s Bank. The role of the Energy Minister Kanchana Wijesekera in announcing the price hike without issuing a gazette notification on the new prices has stirred controversy as it is the Minister of Finance who issues such a gazette under normal, established practice.
The government was prompted to introduce the fuel price hike following trends of crude oil price in international markets that hit new highs for the third week and the country’s current weak foreign exchange position,
Petrol 92 Octane price was increased by Rs.84 to Rs. 338, Petrol 95 Octane by Rs.90 to Rs.373, Auto Diesel by Rs113 to Rs.289,.
The Energy Ministry attributed the reason to the hike to heavy losses incurred by the CPC in selling fuel to state institutions like Ceylon Electricity Board and the Sri Lankan Airlines at subsidised prices and its delay in due payments along with high dollar rate and high global oil price . However the LNW learns that the CPC will rake in massive profits with the new increase.
According to official data, the cost of importing a litre of Petrol 92 at the rate of US$ 61.35 per barrel and exchange rate Rs. 340 per dollar is Rs.127 while its total tax (import duty+ ESC +PAL) is Rs. 39. Therefore the cost per litre is Rs 160.50 and the difference between the imported price and selling price (Rs.338- Rs. 127) is Rs.211.
This was the highest profit gained by the CPC the recent amidst the scarcity of fuel triggered by dollar criis provoking people to take to the streets protesting against the sudden massive petroleum hike and in one such protest in Rambukkana police opened fire to disperse angry crowds killing a protestor and injuring 24 others five days ago.
This was President Gotabaya Rajapaksa’s recent saga of the newly appointed youth cabinet for doings things very much better, economic and political analysts said.
Similarly the import cost of a litre of Petrol 95 is Rs. 125. The total tax component (import duty+ ESC +PAL) is Rs.60 and the import price is Rs. 185. Diference between the import price and selling price (Rs.373-Rs.185 ) is Rs. 188
The cost of a litre of Auto Diesel is Rs.160,50. The tax component is Rs.12.the import price is RS172.50 and the difference between the imported price and selling price (Rs.289 –Rs.172.50) is Rs. 117.50.
With a view of managing the situation better newly appointed Minister Kanchana Wijesekera ha sincreased the fuel price to the highst level in the region doing a better service for the country.
The normal procedure was that the price revision of fuel is determined and announced in a gazette notification by the Finance Ministry with effect from midnight on the date of the notification of revised prices. The price hike of the preset regime has not followed this proper procedure by the present minister of energy.
The present violation of procedure was more serious as the present Energy Minister has taken the decision to increase the fuel price during the absence of the Finance Minister who was in Washington to attend IMF meetings.
This was confirmed by a former treasury secretary saying that the determination of the tail fuel price is a very complex mathematical procedure involving various variables such as the landed cost, processing cost, administrative cost and taxation.
Therefore this complex procedure of fuel price determination has been vested in treasury officials with knowledge and practical experience he disclosed.
However newly appointed minister of power and energy Kanchana Wijesekera told parliament on Thursday 21 that the decision was taken after discussion with relevant ministry and CPC officials and with the consent of the President..
He added that he contacted the finance minister over the phone and received his approval as well.