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Sri Lanka CPC's to run losses after diesel tax hike: Minister

Sep 19, 2016 16:26 PM GMT+0530 | 0 Comment(s)

ECONOMYNEXT - Sri Lanka's state-run Ceylon Petroleum Corporation is likely to lose about 2.0 billion rupees a month following hikes in diesel taxes in August, which were imposed without consulting him, Petroleum Minister Chandima Weerakkody said.

Though the finance ministry hiked excise taxes on diesel by midnight gazette, no price retail price increase was allowed, forcing fuel retailers CPC and Lanka IOC to bear the cost in the style of an income tax.

During the Rajapaksa regime, petroleum retailers were forced to borrow and run losses, while paying taxes. It made the central government budget look good, but state enterprises ran losses, ultimately de-stabilizing the monetary system.

Weerakkody said in the first six months of the year the Ceylon Petroleum Corporation made a profit of 46.5 billion rupees, helped by low international prices.

During the period CPC brought down short term borrowings from 350 billion rupees to 310 billion rupees, Weerakkody said.

The CPC and Ceylon Electricity Board borrowed heavily in 2011 and 2012 of state banks, to generate a balance of payments crisis after a drought and a spike in fuel prices amid Federal Reserve quantity easing.

But global commodity prices have stabilized after the Fed ended excessively loose policy and the dollar rose against real commodities. (Colombo/Sept19/2016)