Fuel prices soar, relief promised

By Damith Wickremasekara

The government carried out a snap increase in fuel prices last night upping petrol by Rs. 12, diesel by Rs. 31 and kerosene by Rs. 35 a litre. It was the biggest jump in diesel and kerosene prices.
Until yesterday, the price of a litre of petrol was Rs 137, diesel Rs 84 and kerosene was Rs 76.
The increase of diesel and kerosene prices amounted to a massive 36.9 per cent and 49.3 per cent respectively.

Petroleum Minister Susil Premajayantha told the Sunday Times that the increases were inevitable since the Treasury was forced to incur a heavier cost after world market crude oil prices shot up. However, he said measures to provide relief to consumers in key sectors have been worked out by the Treasury.
“We will offer a relief package to school vans, private and state-run bus services, three-wheelers and Samurdi beneficiaries,” the minister said.

He said concessions would be given to private and state-run bus services that would obviate the need to increase bus fares. He gave no further details.

The Minister’s announcement came just a week after President Mahinda Rajapaksa’s warning to Sri Lankans. He said in his address to the nation on Independence Day, “it is important to understand the problems we face due to the rise in oil and gas prices.” He emphasized that “it is important to be aware of the reality” and added that “we should be prepared to demonstrate our strength and courage to the world.”

However, trade sources cautioned yesterday that an increase in a variety of essential food and other consumer items would become inevitable. This was due to transport costs that would increase correspondingly with the new fuel prices. These sources said the snowballing effect would inevitably contribute to the mounting cost of living.

A Petroleum Resources Ministry official said yesterday the price revision was likely to abolish state subsidies. An example, the official said, was the sale of diesel where the state was suffering a loss of Rs 22 a litre. Similarly, the state was also incurring a loss of Rs 39 a litre on kerosene. The new prices would be fixed at levels that would not require state subsidies.

Minister Premajayantha said crude oil prices, during the past week had increased by US$ 8 a barrel. At present, Sri Lanka was importing crude oil at US$ 110 a barrel compared to US$ 98 a week ago. The price of refined oil had shot up to US$ 131 a barrel compared to US$ 123 the previous week. “We are subsidizing fuel supplies to the Ceylon Electricity Board for thermal power, the transport services and security forces. We cannot carry this burden any longer,” he said.

Meanwhile, Treasury Secretary P.B. Jayasundara yesterday met with heads of three private bus operators’ associations. He outlined the new package that would be given to them to avert an increase in bus fares.

Private Bus Operators’ Association President Gemunu Wijeratne who took part in the discussions said that under the package short-distance buses would be reimbursed for the diesel cost for 50 kilometres while long-distance buses would be reimbursed for a distance of 80 kilometres. The bus owners would be told to notify a bank account and the reimbursement would be deposited there.

He said yesterday that any package was good, but there could be corruption in implementing it.
He said that accordingly a proposed increase of bus fares has been put off until July. He said they were planning a strike with effect from tonight (Sunday) if they proposed package by the government is not implemented. However the organisation is known to withdraw their strikes at the last minute.

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