ECONOMYNEXT – Sri Lanka is planning to cut kerosene prices by 25 to 30 rupees a litre, State Minister of Fisheries and Rural Economy Dilip Wedaarachchi had said amid protests by fishermen who had got used to the highly subsidized fuel.
Sri Lanka cut the price of petrol sharply in January 2015 from 81 to 65 rupees, as part of mis-guided economic proposals by then Finance Minister Ravi Karunanayake. Later kerosene prices were cut to 44 rupees a litre.
Sri Lanka’s got into balance of payments trouble and the rupee fell due to the 2015 budget, which raised spending and also cut taxes. The central bank then cut interest rates with printed money generating a balance of payments crisis.
Then Treasury secretary P B Jayasundera gradually raised kerosene prices, which is similar to jet fuel and is usually the most expensive product to import, in an important reform.
The sharp price cut encourage industrial use of subsidized kerosene, as well as adulteration of other fuels and the mixing of diesel with kerosene for transport, leading to massive losses for the Ceylon Petroleum Corporation. (Colombo/June10/2018)