Tuesday March 10, 2020 09:24:03
ECONOMYNEXT – Sri Lanka is considering a cut in retail fuel tariffs after global oil prices crashed, Minister of Power and Energy Mahinda Amaraweera had said, as a global Coronavirus epidemic reduced air travel, transport and factories closed in China and other countries.
Sri Lanka abandoned monthly price adjustments after a new administration came to power in December 2020.
But the government is considering a cut in domestic fuel prices, Amaraweera had said.
Fuel is a key source of revenue for the government, brining in excise duties which are highest on petrol, import duties and the port and airport levy.
The Singapore export price of 92-Octane petrol was about 56 dollars a barrel last week (about 65 rupees a litre) before freight and landing costs in Colombo.
Diesel prices which are usually higher, had also come down to the level of petrol this year (about 57 dollars a barrel), and is retailed around 104 rupees in Sri Lanka with a lower level of taxes compared to petrol.
Monday’s oil price crash is expected to push down refined petrol to around 40 dollars a barrel in Singapore (about 45 rupees a litre), according to S&P Platts.
A fall in fuel prices is a ‘stimulus’ to the global economy.
A cut in retail fuel prices in Sri Lanka would increase disposable incomes of the public and margins of companies, stimulating both retail demand and finances of the companies that use energy.
When oil prices fall, wealth is transferred from producing nations to customers in consuming countries and energy using non-oil companies.