Despite the recent slump in world oil prices, the Ministry of Power and Energy last week said that there will be no fuel price revision soon and added that the next price revision will be done according to the pricing mechanism that is expected to be implemented in October.
Accordingly, the fuel pricing formula has already been formulated and is expected to be implemented next month after obtaining approval from the new Government. “We have finalized the formula and are awaiting the approval of the new government,” Secretary to the Ministry of Power and Energy, Dr. B.M.S. Batagoda told The Nation Gain.
Crude oil prices in the world market recorded a downward trend since June this year and reached US$ 42 during mid-August. However, prices began to pick up during the latter part of last month ending at US$ 52.64 by August 31.
Despite the world trends, Dr. Batagoda pointed out that there will be no fuel price revisions until the pricing formula is implemented.
He stated that the formula would incorporate several factors, including the trends in the world market. “We initially thought of revising the prices every three months through the formula.
However, we then decided to take into consideration the average price of every six months when revising fuel prices according to the formula.
Dr. Batagoda stated that while drafting the formula, the government had to look at the changes that would have to be made for taxes on imports. “We buy fuel on credit basis where we pay the supplier after some time. Therefore, the formula had to be drafted keeping all these factors in mind,” he added.
Analysts earlier stated that oil prices would pick up during the latter part of the year. However, Petroleum Analyst at the Petroleum Resources Development Secretariat (PRDS), Ranali Perera stated that there wouldn’t be a major fluctuation in world oil prices for the next two years. “Therefore, we wouldn’t see a price revision immediately,” she said.