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‘Fuel prices hike only solution to forex crisis’

27 May 2021

  • Energy Ministry Secretary says it will reduce demand

By Buddhika Samaraweera   Increasing fuel prices is the only solution for the urgent need to control the domestic demand for fuel in the face of the foreign exchange (forex) crisis that the country is faced with at present, Ministry of Energy Secretary K.D.R. Olga said. Speaking to The Morning, she said that in the event of a hike in fuel prices, only the prices of petrol and other petroleum products will be increased and not the price of diesel, as it is directly related to the daily needs of the people. “If there is an increase in fuel prices, it is not to inconvenience the public, but to control the local demand for fuel. It costs about $ 3 billion a year to import petroleum and related products. In the current situation, it should be controlled because it is a huge expense,” she noted. According to her, the Cabinet Subcommittee, chaired by Prime Minister Mahinda Rajapaksa, which has been appointed to look into the losses of the State owned petroleum company the Ceylon Petroleum Corporation (CPC), has met in Parliament on 20 May to discuss the losses incurred by the CPC due to the increase in fuel prices in the world market. The Subcommittee is also comprised of the Minister of Power Dullas Alahapperuma, the Minister of Industries Wimal Weerawansa, the Minister of Fisheries Douglas Devananda, the State Minister of Money and Capital Market and State Enterprise Reforms Ajith Nivard Cabraal, and the Minister of Energy Udaya Gammanpila. “During the tenure of the United National Front-led Government, a fuel pricing formula was implemented to determine the fuel prices. It was operational until September 2019. In the early days of the outbreak of the Covid-19 pandemic in 2020, there was a fall in fuel prices in the world market and therefore it did not have an adverse impact on the local market. But at present, the prices of petroleum in the world market are rising. The Government has now granted almost all the tax concessions that can be given to the CPC. So the only solution left is to increase fuel prices,” Olga added. However, she added that no final decision has been taken regarding any increase in the fuel prices yet. Attempts to contact Gammanpila to inquire about the current situation with regard to any hike in fuel prices were not successful.  


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