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Energy Ministry says fuel price hike essential 

19 Oct 2021

  • $ 500 m Indian credit line has not reduced necessity 
BY Buddhika Samaraweera  The Energy Ministry said that although India is likely to extend a $ 500 million credit line for the purpose of purchasing fuel, it is essential to increase fuel prices in line with the prevailing world market prices.  The Morning yesterday (18) reported that the Government of Sri Lanka is holding discussions with Indian officials to secure a $ 500 million credit line from India, to be used for the purchase of fuel and crude oil-related products, and is optimistic that these will prove fruitful within the next two weeks. However, speaking to The Morning, Energy Ministry Secretary K.D.R. Olga said that despite the possibility of credit facilities being extended, fuel will have to be purchased at normal prices and that therefore, since the loss to the Ceylon Petroleum Corporation (CPC) and the Lanka Indian Oil Corporation Ltd. (LIOC) remains the same, an increase in fuel prices will inevitably be required. Explaining further, she said: “Currently, there are two major issues, one is the USD (US dollar) deficit in the country and the other is the loss incurred by the CPC and the LIOC through the sale of fuel at the current prices. So getting a credit facility will only solve the issue of the dollar deficit.”  Meanwhile, when inquired about reports that the request made by the Energy Ministry to the Finance Ministry to grant any tax relief or other concession to fuel-importing companies, namely the CPC and the LIOC, has been rejected, Olga said that the Energy Ministry has, as of last afternoon, not been informed about this.  However, she said that Energy Minister Udaya Gammanpila would discuss the issue of fuel prices at the Cabinet’s meeting scheduled to be held last evening, adding that the approval of both the Finance and Energy Ministries is required to increase fuel prices. When queried about the progress of the deal to secure a $ 500 million credit line from India which is to be used for the purchase of fuel and crude oil-related products, Treasury and Finance Ministry Secretary S.R. Attygalle on Sunday (17) told The Morning that discussions are underway, but that it is not confirmed yet. Commenting on the matter, Olga, on an earlier occasion, said that talks were ongoing towards this purpose and that since India had extended several credit facilities to Sri Lanka in the past, they were likely to agree to this one as well. “India regularly provides credit lines to Sri Lanka, for infrastructure or for purchasing vehicles, and this is a similar credit line extension along those lines,” she explained. The Morning reported last week that the Energy Ministry, on behalf of the country’s leading fuel suppliers, the CPC and the LIOC, had written to the Finance Ministry requesting that they be granted some concession for the import of fuel, noting that fuel prices would inevitably increase in the event that such a concession is not granted.


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