Lack of a price formula raises serious questions on the basis that fuel prices were increased.
After the Central Bank of Sri Lanka (CBSL) allowed the rupee to float on March 7, a series of price hikes unleashed starting with the state-run Ceylon Petroleum Corporation (CEYPETCO) announcing an all-time price hike of petrol and diesel on March 12.
Following this, the cost of petrol and diesel skyrocketed bringing the minimum pricing for a litre of petrol to Rs. 254 from Rs. 177 and diesel to Rs. 176 from Rs.121.
CEYPETCO’s reason for the price hike was the rise in the price of Brent Crude oil on a global scale. However, three days following their announcement global Brent prices had subsided by 23 per cent.
A week after CEYPETCO announced new fuel prices, various essential commodities including milk powder and flour increased their prices to unsustainable levels with the recent one to be added on the list being LPG gas.
“We do not know on what basis the fuel has been priced. This is non-transparent pricing and is a politically made decision. A fundamental problem with the current government and the previous governments is that politicians get involved in the pricing of LPG, milk, or fuel”, said Harsha de Silva commenting on a question on a price formula that News Cutter asked.
On March 20, the price of a Laugfs gas was increased to Rs. 4199. Litro however hasn’t yet announced a price hike as yet. Both Litro and Laugfs have a duopoly over the supply of LPG to the Sri Lankan market.
Harsha de Silva said that the formula for LPG is also not being used and accused saying that prices were being hiked randomly.
“The best way to arrive at a price is to have a formula and by having a formula, politicians cannot avoid bringing prices down when global prices fall. When global prices go up, prices are increased and however do not reduce when the global prices fall. A consumer accrues benefits when there is a price formula,” said Harsha de Silva.
“If there is a price formula, then there also has to be a fund for price stabilization. When an increase in prices occur, the additional costs must be covered partly by the consumer and the fund. Similarly, when there is a decrease, a part can go to the consumer as a reduction in price and to the fund to be used later,” said Harsha de Silva.
“Not every increase needs to be entirely passed on to the consumer vice versa with deductions. There are ways to smoothen it out,” He said.
“We had a price formula which the current government did away with it the moment they came to office and are arbitrarily increasing prices,” said He.
When News Cutter tried to reach out to the Chairman of CEYPETCO, and to the Minister of Energy for comments, none of them responded to the calls.
