The proposed pricing mechanism for fuel is likely to be delayed further by three months and would see the light of day in October, Minister of Power and Energy, Patali Champika Ranawaka said last week.
The proposed formula was expected to be made public mid this year but Ranawaka said that the implementation would have to wait till October as it was still being studied by the relevant stakeholders before getting Cabinet approval.
“Before being gazetted, the formula has now been given to experts and several stakeholders including the Public Utilities Commission of Sri Lanka (PUCSL) for their suggestion and input,” he said.
In addition, the formula will also be made public for suggestions. “The public will be given a month to come forward with their suggestions. It is a long process and therefore will take some time to be implemented,” the Minister added.
Meanwhile, institutions such as the Ceylon Petroleum Corporation (CPC) and Lanka Indian Oil Company (LIOC) stated that they had recorded losses during the past few months after the government reduced fuel prices in January.
The LIOC said it had written to the Power and Energy Ministry and the Treasury, expressing their concerns over the continuous losses faced after the Government had reduced the fuel prices in January this year.
According to reports, the LIOC had to bear a loss of Rs.25 per liter of petrol due to the current pricing.
Ranawaka stated that the losses faced by the LIOC and the CPC was due to the taxes imposed and added that they made a request for tax reduction on imports.
Accordingly, the price of a barrel of crude oil was USD 45 when fuel prices were reduced in January and had now increased to USD 65.
Ranawaka, however, stated that the losses recorded by both institutions were due to taxes and added that a request had been submitted to slash tax on fuel imports.
Meanwhile, petroleum analysts stated that the increase in crude oil prices in the world market did not warrant an increase in Sri Lanka at the moment.
Petroleum Analyst at the Petroleum Resources Development Secretariat (PRDS), Ranali Perera stated that there would not be a drastic change in crude oil prices in the world market for the next two years.
“Fuel prices locally are not decided based on world market prices alone. It is decided based on several aspects such as the demand, government policies and several other factors. Therefore, at the moment, the price of fuel does not warrant a change despite the price increase in the world market, she said.