Monday, 24 May 2021 10:16

CPC to hike fuel prices in line with global price rise Featured

Sri Lanka’s state-owned Ceylon Petroleum Corp (CPC) is under pressure to raise fuel prices as the refiner continues incurring lossesas oil prices have skyrocketed in the global market a front line minister said.

Reduction in fuel production and oil-rich nations seeking more profits and the depreciation of rupee were the primary reasons behind spiralling petrol and diesel costs in the country.
Even though oil prices have skyrocketed in the global market, a litre of kerosene is still being sold locally for Rs. 70, whereas it should ideally be sold at Rs. 100 per litre to keep up with the global price hike,senior CPC official said.
He added that that as a result of selling kerosene at a concessional rate, CPC ended up incurring a loss of Rs. 35 billion.
Ceylon Petroleum Corporation was hit by 21.8 billion rupee foreign exchange loss with the US dollar and utility had forex liability despite rupee cash reserves, official data showed.

A collapse in global oil prices due to the Coronavirus lockdowns in the first half of 2020 had helped the CPC post a 33.9 billion rupee operational profit.

“However, the depreciation of the rupee against the US dollar resulted in an exchange rate variation loss of Rs. 21.8 billion to the CPC during the year given the large foreign currency exposure of the CPC,” the Central Bank said in its 2020 annual report.

The Central Bank has suggested that fuel prices should be revised to conform to spikes in the world market, State Minister for Finace Ajith Nivard Cabraal said.

Je said that this request was made by the Central Bank representatives, including Governor W.D.Lakshman,at a meeting with Prime Minister Mahinda Rajapaksa this week.

State Minister Cabraal who was present at the meeting said it was a frank and cordial discussion on measures to be taken for the economic consolidation.

He noted the Central Bank was straightforward in its request for the upward revision of fuel prices.

Also, he said measures related to imports and the stabilization of the rupee value was among key matters discussed.

“We will come up with the government’s response to the Central Bank’s requests soon ,” he said

 

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