oil in relation to the fuel prices in the world market

Monday, 30 April 2018

By Ashathi Warunasuriya
The Finance Ministry says the pricing formula for oil in relation to the fuel prices in the world market will be presented to the next Cabinet Meeting, With the increase of fuel prices at petrol sheds belonging to Indian Oil Corporation (IOC), it has been pointed out many a time that the Ceylon Petroleum Corporation (CEYPETCO) has been incurring massive losses.

Petroleum Resources Development Ministry Secretary Upali Marasinghe pointed out that after the IOC fuel price hike, the CEYPETCO is incurring a Rs. 38 million additional loss per every passing day.
Therefore, the CEYPETCO has proposed to the Finance Ministry that the corporation should also increase the prices of its fuel.
Thereafter, the Finance Ministry took measures to prepare a pricing formula for fuel. It will be presented to the next Cabinet Meeting and it is expected an increase in fuel prices thereafter.
Meanwhile, CEYPETCO National Trade Union Federation Chairman Ananda Palitha said that his union will urge the government to increase the oil prices sans a pricing formula.
He said the CEYPETCO incurs a Rs. 19 Million loss per day at present since the corporation has no correct pricing formula and a proper administration.
Palitha further said that an increase in oil prices sans a correct pricing formula, too, would affect the public and CEYPETCO employees.
Meanwhile, the Ceylon Electricity Board (CEB) Engineers’ Association has decided to launch a indefinite strike from May 8 asking for several demands.
The Electricity Sector in Sri Lanka produces 15 billion units of power annually and the number increases by one billion every year. Had the price of a unit increased by one rupee, the country would have to incur a Rs. 15 billion loss per a day.
It is up to the CEB to prepare a plan to generate power for the country with the least expenditure and in accordance with the technical needs of the power system. Accordingly, before the establishment of the Norochcholai Coal Power Plant and prior to 2012, the CEB had spent Rs. 23.66 to generate a power unit.
However, after establishing the Norochcholai Coal Power Plant, the price reduced to Rs. 15,07. In parallel to the reduction, the government for the first time reduced the electricity prices by 25 percent. But the prices were increased again in 2017 to Rs. 21.32 since low expenditure power plants have not been added to the national electricity grid in large numbers since 2017. Therefore, the CEB, which received a large profit in 2015, incurred a Rs. 45 billion massive loss in 2017.
Throughout ten years, the CEB has been taking measures to resolve social, political and environmental issues regarding the establishment of the power plant. Thereafter, the entire plant, however, was closed down a few days before the tender procedure to take place for it.
Now at least a plan is not in the offing to resolve power conflict in the country by establishing a similar plant. Against this background, the CEB has to bear a kiss if Rs. 50 billion for the next 5-7 years, the CEB Engineers’ Association emphasized.