Ceylon Petroleum Corporation in trouble while IOC decides to increase fuel prices

Ceylon Petroleum Corporation in trouble while IOC decides to increase fuel prices

Ceylon Petroleum Corporation in trouble while IOC decides to increase fuel prices

Written by Staff Writer

30 Sep, 2017 | 8:25 pm

Lanka IOC has decided to increase the prices of Petrol and Diesel with effect from October. The price increase percentage is yet to be decided.

But… why? – According to Lanka IOC, the company is suffering a Rs. 17 loss per liter of Petrol and a Rs. 14 loss per liter of Diesel.

However, According to the Ministry of Petroleum Resources Development, LIOC is yet to make a formal request to increase the fuel prices.

Crisis at CPC

While LIOC is saying they are increasing the prices. the non payment of dues by the CEB and Private power plants has led to a financial crisis at Ceylon Petroleum Corporation (CPC).

According to the Ministry of Power and Renewable Energy, the due payments add up to around Rs. 36.8 billion. However, the CEB is making preparations to make the payment in the coming weeks, said the Ministry spokesperson Sulakshana Jayawardene

“The current policy is to manage the expenditure without passing it on to the consumers. There were talks of increasing prices but a decision has not been taken…” said Sulakshana Jayawardene (Media Spokesperson – Ministry of Power and Renewable Energy)

Bigger problems for CPC?

According to the CPC General Employees Trade Union, there are bigger issues.

D.G. Rajakaruna, Secretary of the Trade Union says that the CPC owe nearly Rs. 2500 billion to two state banks.

The main cause, according to Rajakaruna, is that the CPC provides fuel to Ceylon Electricity Board at a cost lower than the import cost.

“In 2007 they brought fuel for 100 rupees and sold it for 80. The treasury should reimburse the CPC for the losses, however it wasn’t paid. We are paying massive interest for these loans. As a result they whenever there is a fuel price adjustment, they add this on to the fuel price. When you do this, the IOC also has an excuse to do the same and this money leaves the country..” said D.G. Rajakaruna.

The crude oil prices in the world market has been fluctuating over the past few years.

The price of a crude oil barrel – 2015, 2016 & 2017;

  • January 2015 – $50 and 23 cents
  • January 2016 – $29 and 49 cents
  • December 2016 – $54 and 53 cents
  • January 2017 – $51 and 49 cents (steady)

D.G. Rajakaruna added: “When you take a look at the prices of fuel from January 2015 to November 2016, the IOC made gains as small as 1 rupee per liter and as large as 38 rupees per liter.”

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