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Sri Lanka to crackdown on kerosene sales for transport, factories

ECONOMYNEXT – Sri Lankan authorities will cancel the licences fuel retail outlet owners illegally selling subsidised kerosene to factories and heavy vehicle operators, Minister of Petroleum Resources Development Arjuna Ranatunga said.

The practice, which had worsened in recent years, was adding to the heavy losses of the state fuel refiner and retailer, Ceylon Petroleum Corporation, he told a news conference.

The current administration created the problem with Finance Minister Ravi Karunanayake curting kerosen prices sharply after coming to power in 2015. At the time analysts warned that several large industries were using kerosene and had converted from using furnace oil, which was a key resson for former Treasury Secretary P B Jayasundra to near-market price kerosene.

The government is even considering seizing the businesses of fuel retail owners caught making illegal sales of kerosene, Ranatunga said.

There are two types of kerosene sold in the island, Lanka Kerosene and Industrial Kerosene. Industrial Kerosene is colorless and used in factories.

Lanka Kerosene is red in color and sold to low income people who use it for lighting and fishermen at a loss of Rs.48.63 per liter to the CPC. Kerosene is illegally sold to operators of buses and trucks who mix it with diesel to run their vehicles.

Consumption of kerosene, which had been expected to decline with more homes being connected to the electricity grid, had actually risen in the past three years, Ranatunga said.

Kerosene consumption had gone up 198,090 kilolitres in 2017 from 138,505 kl in 2014, which showed the increase was not because of genuine demand but for use by factories and in transport, since it was cheaper, being subsidised.

Ranatunga said the government was willing to bear losses because of subsidised sales of kerosene to the poor but not to vehicle and factory owners.

The CPC bore a loss of Rs. 5.4 Billion from kerosene sales alone in 2017.
(COLOMBO, March 22, 2018)





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