ECONOMYNEXT – Sri Lanka will re-price fuel every two months with a formula using Platts Singapore benchmark prices, but the prices are among the lowest in South Asia, Finance Minister Mangala Samaraweera said.
Sri Lanka raised 92 Octane petrol to 137 rupees from 117 rupees a litre and auto diesel to 119 rupees a litre from 109 rupees.
Samaraweera says the price of 92-Octane Petrol in Nepal is the equivalent of 149 rupees a litre, Bangladesh 159 and India 169 rupees.
Sri Lanka is charging total taxes including, excise, import duties and port levies of around 58.8 rupees per litre of petrol but it lower than other countries in the region, State Minister for Finance Eran Wickremeratne said.
“In India the tax is 80 rupees a litre, and in Singapore 97 rupees,” he said.
The Treasury will recoup 55.9 billion rupees in lost taxes in the next 12 months, Samaraweera said.
Sri Lanka sharply cut fuel taxes in December, but the taxes will not be fully restored to the previous level, Treasury officials said.
In the first quarter the Ceylon Petroleum Corporation had lost 11.3 billion rupees, and the hike may allow it to break-even officials said.
Costs at CPC rose after global oil prices went up and the central bank busted a currency peg from 131 to 157 rupees, by printing money and also targeting a real effective exchange rate index.
According to official data CPC imported a barrel of oil after paying freight for 55.47 dollars in January 2015. At the time Sri Lanka's rupee peg was at 132.2 to the US dollar giving a rupee price of 7,333 for a barrel of oil.
In March 2017, the CPC has paid 67.97 US dollars for a barrel of oil or 22.5 percent higher.
But because the central bank printed money and the rupee collapsed the rupee price of a barrel of crude rose to 10,601 rupees, which is 44 percent higher than the January 2015 price. (Colombo/May10/2018)