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CPC, LIOC joint fuel price formula next week 

06 May 2022

  • Kanchana Wijesekara to submit formula to Cabinet
  • Notes intention of formula is not to cover losses entirely
  • Says even after price hikes, CPC is still running at loss
  • CPC bleeds while LIOC records profits
By Imesh Ranasinghe  The Energy Ministry is to present a joint fuel price formula for Ceylon Petroleum Corporation (CPC) and Lanka Indian Oil Corporation (LIOC) to Cabinet next week, aiming to “reduce the losses to some extent” and fund future fuel shipments, said Minister of Energy Kanchana Wijesekara. Speaking in Parliament yesterday (5), the Minister said that even after the fuel price hike on 18 April, CPC is still running at a daily loss due to the continuous depreciation of the Sri Lankan rupee and subsidies provided by the Government to the people. According to the Minister, a litre of kerosene is sold at Rs. 87, even though Rs. 317 is spent to make a litre of kerosene, as the Government does not want to burden the fishing community and low-income families that are dependent on kerosene. Similarly, he said losses are still made on each litre of petrol and diesel sold, as prices were last hiked when the dollar was at Rs. 330, while banks are now quoting the dollar at Rs. 370; as well as due to the increase in international oil prices. Minister Wijesekara said that the intention of the joint fuel price formula is not to cover the losses entirely, but to reduce the losses to some extent so that CPC can allocate funds to future fuel shipments. Explaining the impact of the increase in international oil prices, the Minister said that two years ago, CPC only required $ 150 million monthly for fuel imports, whereas $ 580 million is now needed to fund fuel imports for the month of May. Further, he said prior to the price hike on 18 April, the CPC was incurring a loss of Rs. 1,613 million daily through the procurement and sale of fuel.  Earlier this month, CPC Chairman Sumith Wijesinghe told the media that the CPC’s daily losses have reached between Rs. 800-1,000 million, as the CPC is losing Rs. 110 per litre of diesel and Rs. 52 per litre of petrol sold – which was when it was priced at Rs. 254 per litre.  In February, then-Energy Minister Udaya Gammanpila had said that CPC had recorded a loss of Rs. 83 billion in 2021, and is making a loss of Rs. 551 million per day due to low fuel prices and taxes paid to the Government. He had also said that CPC was paying Rs. 368 million in taxes each day to the Treasury, which had contributed to the loss it was making, and had added that the CPC had borrowed $ 3.71 billion. In the last two months alone, the price of Octane-92 has increased by 90% from Rs. 177 to Rs. 338, while Auto Diesel has increased by 81% from Rs. 159 to Rs. 289. Moreover, LIOC has similarly increased the price of Octane-92 by 90% and Auto Diesel by 138% in the last three months. The net profit of LIOC for financial year (FY) 2021/22 was Rs. 4.81 billion, and the net profit for the period between January to March 2022 was Rs. 3.37 billion, which means that 70% of the company’s income was generated in the three months between January to March 2022. The net profits of LIOC for FY 2021/22 had increased by 550% compared to the previous financial year, as it recorded just Rs. 876 million in 2020/21.


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