ECONOMYNEXT – Sri Lanka’s President and Prime Minister will have to decide whether to hike fuel prices as crude prices rise, Petroleum Minister Arjuna Ranatunga said, kicking the decision of whether to cover fuel losses with taxes on foods, hospital bills and other consumer goods.
Ceylon Petroleum Corporation has not raised prices despite import costs going up.
“Government has not finalized whether to maintain CPC and CPSTL (Ceylon Petroleum Storage Terminals) as profitable institutions or as institutions which provide service to the public, yet,” Ranatunga was quoted as saying.
“Government has to finalize it soon. Uncertainty of fuel price hike is the most popular topic everywhere.”
“Ministry of Finance also discussing with us. However final decision has to take by the President and Prime Minister together with the cabinet.”
That state enterprises ‘provide a service to the public’ by running losses is one of the key electoral frauds perpetuated upon the people since independence. SOE losses, particularly CPC and Ceylon Electricity Board can de-stabilize the entire credit system and the economy.
The losses in the end have to be covered with general taxes on goods, including food and hospital bills instead of charging the cost directly from the users, or borrowing against the future. The top users of energy are the higher income earners of the country.
Ceylon Petroleum Corporation has not raised prices consuming resources of the poor, or borrowing from banks and pushing up interest rates in the country, Lanka IOC, a publicly traded company has raised prices reducing risks to economic instability.
The current administration in economic follies in 2015 and 2016 budgets, cut kerosene prices to rock bottom, amid allegations that it was a corrupt decision to help politically connected businesses that have machinery that can use the fuel.