• No demands from TUs, fuel price formula ensures transparency: Jayakody 

Petroleum sector Trade Unions (TUs) are calling on the Government to reduce fuel prices by 12%, citing concerns over recent changes in the pricing formula.

United Trade Union Alliance Convenor Ananda Palitha told The Sunday Morning that the current pricing structure deviated from the original agreement made in 2022 with the International Monetary Fund (IMF).

Under the agreement, the Government was supposed to absorb the debt of the Ceylon Petroleum Corporation (CPC) while keeping fuel prices competitive.

However, a controversial Cabinet paper presented by former Power and Energy Minister Kanchana Wijesekera had led to the introduction of a surcharge, which unions argue is a violation of the original plan and unfairly burdens consumers.

“After the pricing formula was introduced in 2022 in consultation with the IMF, it was agreed that the entire debt of the CPC would be absorbed by the Treasury. Thereafter, the prices were made competitive with the private competitors for fuel supply, because the debt would not be added to the final charge on the consumer. They also charged 1% royalty to be paid to the Treasury,” he said.

“However, Wijesekera, in violation of the law, presented a Cabinet paper seeking to remove the 1% royalty, and in its stead, added a Rs. 50 surcharge. This was to regenerate the loan of $ 700 million obtained from India to purchase fuel,” he added.

Palitha then explained that the Rs. 50 surcharge added in the pricing formula could be removed. 

“If this Rs. 50 surcharge can be removed and further, if all the unnecessary taxes to calculate the costs of CPC can also be reduced, we will be able to reduce the price of fuel by 12%,” he said.

He also claimed that President Anura Kumara Dissanayake had also expressed a similar view, which had not materialised yet. “The problem is that the Government never did it despite saying it,” he said.

Commenting on the matter, Minister of Energy Kumara Jayakody said that such demands had not been formally communicated to the Government.

“I have not received any official request from unions to reduce fuel prices,” he stated.

“The unions are well aware of the pricing formula, which is guided by variables such as the landing cost and profit margins. The formula endorsed by the IMF ensures transparency and fairness in pricing,” he said.

Minister Jayakody highlighted that the Government could not arbitrarily reduce fuel prices, as doing so could lead to legal and financial complications with foreign companies operating in Sri Lanka.

“If we sacrifice our side to reduce prices, it could result in claims from foreign fuel companies for damages, which the Government cannot afford,” he said.

When asked about global fuel market trends, the Minister noted that recent price movements had not been in favour of reductions. 

“Last week, global oil prices increased by $ 3, pushing rates to over $ 70 per barrel. These factors directly impact the local pricing formula,” he explained.

Regarding potential price changes in February, Jayakody stated that prices were recalculated monthly based on actual costs. 

“The January costs will determine the February prices and it is too early to speculate. However, the Government has taken steps to maintain stability by absorbing some costs, ensuring that prices are not increased unnecessarily,” he explained.