Sri Lanka’s CPC losses to increase after IOC price hike
ECONOMYNEXT – Sri Lanka unit of Indian Oil Corporation has raised fuel prices though state-run Ceylon Petroleum Corporation is yet to do so, boosting its sales and making it suffer more losses.
Lanka IOC has raised 92 Octane petrol by 9 rupees a litre to 126. Auto Diesel has been raised by 5 rupees to 100 a litre.
But 95 Octane and Super Diesel, would be unchanged.
Ceylon Petroleum Corporation Chairman Dhammika Ranatunga told The Sunday Times newspaper that it was not yet hiking prices because it was a ‘state institution which was looking at more than the bottom line."
CPC decision means that the burden of any losses would be transferred to the people through other taxes such as on food as losses of the agency, which are first filled with borrowings, are ultimately transferred to the Treasury.
Energy is consumed more by richer people in any country and subsidizing energy eventually makes the poor bear a bigger burden.
Investible savings in state banks are also transferred to consumption by CPC’s decisions.
CPC has the biggest market share for fuel. The LIOC decision to raise prices means more 92 Octane petrol and standard auto diesel users will buy from the CPC increasing its losses.
LIOC had said the current prices had been set in early 2015 when crude prices were around 47 dollars a barrel. But it was now around 70 dollars.
Sri Lanka’s central bank had in the meantime depreciated the currency from 131 to over 155 to the US dollar further inflating the prices of all imported goods.
Many East Asian nations whose currencies weakened in 2016 when oil prices fell (the US dollar rose) are now stronger.
Sri Lanka was supposed to implement a price formula for fuel in March, but it has not been done. (Colombo/Mar26/2018)