Further fuel price increases inevitable

  • LIOC gives warning as bus operators review fares
  • CPC silent, but likely to follow suit

The Lanka Indian Oil Corporation (LIOC), which runs one third of Sri Lanka’s fuel outlets, warned yesterday that further price increases in diesel and petrol would be inevitable.

This was because the government has failed to reduce taxes on the latest consignment of crude oil imported by LIOC, its Managing Director Suresh Kumar told the Sunday Times yesterday. “We have urged the government to further increase petrol and diesel prices in view of rising world market prices,” he added.

His warning came barely 24 hours after LIOC increased the price of a litre of diesel by five rupees from midnight Friday. This increase is already expected to reflect on all goods and services. They include a price rise in essential consumer items. The Private Bus Operators Association said yesterday it would be compelled to increase bus fares immediately. It said a further increase would only mean the fares would rise further.

The Ceylon Petroleum Corporation, though expected to make an increase, is yet to make an announcement. Power and Energy Minister Susil Premajayantha is away from Sri Lanka. Ministry Secretary Titus Jayawardena was at the Deyata Kirula exhibition yesterday. CPC officials said they were still awaiting a directive.

LIOC’s Mr. Kumar said, “The government promised to reduce taxes from January 8 – the day our consignment arrived. Instead the taxes were reduced from January 11 resulting in a loss of Rs. 220 million to LIOC. As a result of this loss, we were forced to increase prices.”

He was referring to the lowering of the tax to enable the government to reduce the price of a litre of petrol by Rs 15 last month.

Mr. Kumar said LIOC informed Minister Premajayantha of the price increase. However, he was not in Sri Lanka. “We have also urged that the government bring the CPC’s diesel prices in par with the LIOC prices to ensure level playing,” he said.

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