Due to mounting losses in the backdrop of a surge in international fuel prices, Lanka IOC said an increase in the prices of petrol and diesel is on the cards.
However, the proposed price revision will be kept to the barest minimum taking into consideration its impact on the public, LIOC said in a statement.
As LIOC’s losses are very high, a price revision on fuel is necessary to prevent the company going into loses on an overall basis, it noted. “We have been left with no option but to increase the prices of petrol and diesel as the quantum of losses have become unbearable”.
Oil companies in Sri Lanka, Ceylon Petroleum Corporation as well as Lanka IOC PLC have been incurring heavy losses on sale of petrol since January 2015 and diesel since September 2016, the statement said.
Petrol and diesel prices have further increased significantly in the international market in recent months, but the selling prices have not been revised. As per the information available, oil companies at current international prevailing prices are losing apprx. Rs. 17/ltr on the sale of petrol and apprx. Rs. 14/ltr on the sale of diesel, according to the statement.
In June’16/August’16, taxes have been increased on diesel and due to this, the positive margins to oil companies on diesel were also eroded. Significant depreciation of Sri Lankan rupee has also resulted in higher losses to the oil companies as they purchase the product in US Dollars and sell petrol & diesel locally, the statement explained.
The matter has been repeatedly taken up by the oil companies with the concerned authorities, but the prices have not been revised. The concerned officials are fully conscious of this matter, but no decision has yet been taken either to increase the selling prices or reduce the taxes on petrol and diesel. Due to this, the operations of oil companies have become unviable, LIOC said.
It may be noted that the current prices were fixed in January 2015 and since then prices of petrol and diesel have not been revised. The selling price of petrol and diesel in the country remains significantly low as compared to the prices prevailing in the neighboring countries, the statement noted.
Recently, the price of a domestic LPG cylinder was increased by Rs. 110 due to an increase in gas prices in the international market. Similarly, prices of petrol and diesel also need to be pushed up keeping in line with the prices prevailing in the international market and current exchange rates, it added.
(Source: The Island)