Petroleum Minister says final decision on fuel prices to be taken by President and PM

Petroleum Resources Development Minister Arjuna Ranatunga said yesterday the final decision on a possible fuel price hike will be taken by President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe.

Minister Ranatunga said the government is yet to arrive at a decision whether to maintain Ceylon Petroleum Corporation (CPC) and Ceylon Petroleum Storage Terminals Ltd. (CPSTL) as profitable institutions or as service providers to the public despite losses. 

“Uncertainty of fuel price hike is the most popular topic everywhere. Ministry of Finance is also discussing with us. However, the final decision has to be taken by the President and the Prime Minister together with the Cabinet,” Minister Ranatunga said.  The CPC is said to be losing Rs.266 million a week in the absence of a cost-reflective pricing formula.

Unable to take the losses anymore, Lanka IOC, the only other fuel distributor in the country, raised its diesel and petrol retailing prices recently.
Economic analysts say world prices have risen from US$ 55 to 70 a barrel, and the CPC cannot continue to incur huge losses. 

However, Sri Lanka’s fuel prices up to now have remained unchanged since January 2015.

In response to global price surge, almost all the countries in the Asian region have raised their fuel prices.

The political room for the current coalition government to hike fuel prices remains very little. Both coalition partners received an embarrassing drubbing at the local government polls held in February and according to political analysts, higher cost of living was a major reason behind the election defeat. 

Sri Lanka will also have key national level elections in late 2019 and early 2020, and it’s crucial for the current government in power to remain popular to win future elections. 

Asian Development Bank in its flagship report ‘Asian Development Outlook for 2018’ said it expects the Cabinet to approve pricing mechanisms for fuel and electricity this year.