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Sri Lanka fuel pricing delay came from petroleum minister

ECONOMYNEXT – Sri Lanka’s state-run Ceylon Petroleum Corporation delayed the implementation of formula pricing last week, over a request by the line minister to go to cabinet again, Finance Minister Mangala Samaraweera said.

Sri Lanka was to raise fuel prices by formula on July 05, after gaining cabinet approval by long discussion but while one distributor, Lanka IOC raised prices, state-run Ceylon Petroleum Corporation resisted the increase.

"There was no dispute," Finance Minister Mangala Samaraweera told reporters, playing down an apparent attempt to re-politicize fuel pricing, which has been identified a major cause of balance of payments crisis and economic instability in the country.

"Our (petroleum) minister Arjuna Ranatunga though it was necessary to go to cabinet again. Actually there was no need to do it, because on May 11, when the price formula was introduced we said the price will change on the 05 day of the third month.

"But because this was the first time, we listened to the request of the Petroleum Minister and we went to cabinet again and educated then again.

"The cabinet requested now to change the prices every month. In India prices are changed every day."

The formula is based on global benchmark prices.

Analysts say benchmark pricing can reduce corruption and force distributors to buy at the cheapest prices. as the prices are not based on actual import prices, which may contain procurement inefficiencies. (Colombo/July16/2018)

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