Sri Lanka’s ceramics and glass industries ask for lower fuel prices

EconomyNext – Sri Lanka’s ceramics and glass industries are appealing for lower furnace oil prices after global oil prices fell from close to 120 US dollars per barrel in 2011 to below 70 US dollars today.

The Sri Lanka Ceramic and Glass Council of the Ceylon Chamber of Commerce says it is losing out to major competitors in India, Indonesia and Malaysia due to higher than world prices in Sri Lanka.

"We don’t have such resources and the industry heavily depends on imports,” the council said.

"The industry is concerned that the Ceylon Petroleum Corporation has not revised the rates sufficiently over the past 3 years.  Although Petrol, Diesel and LPG prices were reduced recently furnace oil prices remain unchanged.

"The industry is under heavy pressure in the International market from its other Asian competitors whose energy rates are fluctuating with the world prices."

In Sri Lanka petroleum is a duopoly with the state dictating arbitrary prices.

Unlike in countries where private distributors compete and prices change daily, or even where there is an automatic price formula, the state in Sri Lanka can directly intervene to keep prices artificially high or low.

Successive administrations using their coercive state powers, have manipulated energy prices, egged on by opposition parties sometimes generating balance of payments crises by funding subsidies with central bank credit.

A balance of payments crisis in 2011, were triggered by heavy bank borrowings to finance the Ceylon Petroleum Corporation and Ceylon Electricity Board.

When corrective action was taken, the opposition legislators also criticized the move.

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Analysts say a transparent pricing formula would free the people from state interventions in prices and the state will lose a key mechanism to generate balance of payments crises and depreciate the currency.

The Sri Lanka Ceramic and Glass Council said it is now losing orders with factories saddled with excess capacity. Ceramic and glass exports amounted to 40 million US dollars in 2013 and industry employs around 20,000 people.

Outside tableware however the ceramic industry is heavily protected and is no longer efficient enough to export and is making large profits at the expense of the homeless who are trying to build houses, critics have said.

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