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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2422

On The Fuel Price Hike – two divergent views

Colombo, 13 May, (Asiantribune.com):

On the fuel price hike, two Finance Ministers – former and the present one, made comments. Their comments varied on many aspects – reasons for the price hike, as well as on details of how it could be avoided.

Former finance minister’s comment was that of a professional, based on pragmatic and theoretical oriented basis, while the present minister was trying to be realistic, but deprived reasons behind the price hike and also failed in basic details on the avoidance on present and future price hikes.

Former Finance Minister Ravi Karunanayake indicated that Sri Lankan rupee has to be strengthened and taxes on fuel prices reduced - he says then there is no need to increase the prices.

He went on to explain that “We don’t have to execute all IMF proposals. We should only take what’s good for us. Though the government was changed, the state officials remain the same. Ghosts of the previous government still haunt the Central Bank and parts of the Finance Ministry. We said these things back then as well.”

Explaining reasons behind the price increase, Ravi Karunanayake said several causes including the depreciation of rupee to satisfy the IMF as another reason in the increase of fuel prices.

The former finance minister emphasized that strengthening the value of the rupee, as the panacea for so many economic downwards trends the country is presently facing, including the fuel price hike.

He said the increase of fuel prices in the international market may have also played a role in increased prices.

Instead of increasing prices of fuel, taxes on fuel should have been reduced or other alternatives should have been sought,” he said.

He said that for the first time in the history, fuel price to be revised every two months affecting many sectors including the transport sector in the country.

However, the former Finance Minister said as we cannot control the world market, there should be a solid mechanism such as maintaining fuel stocks which could be used when world market prices go up.

He said introducing price formulas to revise the prices twice a month would not be an efficient method and therefore country needs to focus on a lasting method.

In the meantime the present Finance Minister Mangala Samaraweera has failed to offer ways and means to overcome the fuel price hike, instead explained faithfully and loyally, that the fuel price will increase according to a new formula, which will fix prices according to global pricing of crude oil.

Minister Samaraweera said that according to the new formula, the fuel prices of Sri Lanka would vary every two months, based on Singapore Oil Price index.

Minister said that according to the formula the prices will reduce or increase according the global market, therefore by allowing the businessmen to carryout expenses accordingly.

This means, Sri Lanka will be on the mercy of the international fluctuation of the oil prices – a clearly laid economic-trap by the IMF, from which no redemption would be possible in the future.

Minister Samarweera also made remarks that even though the fuel prices increased, still the prices are below the fuel prices of the previous regime.

“Due to the fuel increase the Finance ministry will be able to save the money used to cover the losses of Ceylon Petrolium Corporation,” he said.

He said that money as well as income of the fuel increase will be used for the rapid development of villages under the new programme “Gamperaliya”.

Minister added that, in order to cut losses of the CPC, it has to be restructured. He said meetings are held between the finance ministry and relevant minister to set up the restructure.

The Sri Lankan Cabinet of Ministers approved this new pricing formula at a special meeting chaired by President Maithripala Sirisena.

Accordingly, prices of all forms of fuel - including Petrol, Diesel and Kerosine - saw a steep increase.

The increased prices of Fuel - a liter of fuel issued by CPC will be: Petrol (92 Octane) Rs 137, Petrol (95 Octane) Rs 148, Auto Diesel Rs 109, Super Diesel Rs 119 and Kerosene 101.

However earlier in the day Cabinet Spokesman Dr Rajitha Senaratne said that the government does not hope to introduce pricing formula for fuel.

Asked why the price of kerosene had been jacked up last week to Rs.101, Cabinet Spokesman and Health Minister Rajitha Senaratne said yesterday that it would not apply to fisherman using mechanized boats and Samurdhi recipients.

- Asian Tribune -

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