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Sri Lanka delays fuel price cut, may isolate profit for other benefits: Minister

ECONOMYNEXT – Sri Lanka is still discussing how to cut fuel prices and pass to ensure that bus and taxi fares go down in line, Energy Minister Mahinda Amaraweera said as global prices fell.

“I am not saying we will not make a price cut,” he said. “But we have to ensure that the benefit goes to the consumer. Sometime bus and three wheeler fares do not go down at the same rate.”

Amaraweera said President Gotabaya Rajapaksa will take a decision to ‘benefit the country’ and not look for elections gains.

Sri Lanka suspended a monthly fuel price formula after a new administration came to power in November preventing an automatic ‘stimulus’ going to the people by market pricing fuel.

When fuel prices are cut, disposable incomes of people go up, allowing them to spend money on other goods. However if profits are used to reduce borrowing of the CPC it may reduce credit and allow the central bank to build forex reserves, analysts say.

Falling fuel prices give an opportunity collect higher taxes or reduce losses at energy utilities or both. A cut in value added taxes in January 2020 which had undermined state revenues had spooked rating agencies and foreign investors.

Minister Amaraweera said the government was also looking to create a fund from margin gains made by the Ceylon Petroleum Corporation to give ‘direct benefits’ to the people. (Colombo/Mar12/2020 – Update II)