Sri Lanka examines market pricing furnace oil for industry: official

ECONOMYNEXT – Sri Lanka will look into the possibility of market pricing furnace oil, which is a key ingredient of export industry, an official said.

Advisor to Finance Ministry Deshal de Mel told Eco said the government would look into the possibility of bringing furnace oil into a price formula.

Although petrol and diesel is market-priced, furnace oil is not.

Furnace oil, which is mostly sold to business-to-business and the state-run Ceylon Electricity Board, has been kept at a price above cost in the last three years when oil prices fell.

However, the exporter industry, which uses furnace oil, like the glass industry, has been facing competition from countries with cheaper energy.

Sri Lanka’s rupee collapsed in 2018, due to the operation of a soft-peg with contradictory policy by the Central Bank as well as real effective exchange rate targeting.

This had made Ceylon Petroleum Corporation run a loss of 104 billion rupees, and forex losses of 82 billion rupees, raising questions about why the utility is running such a large open position in foreign exchange and whether it is under coercion from sections of the state to do so. (Colombo/Mar09/2019-SB)

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