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Fuel pricing formula proposal to Cabinet next week

02 May 2022

  • Decision taken following talks between Energy Ministry, CPC, LIOC
  • Fuel stabilisation fund also to be discussed
The Power and Energy Ministry is due to present a proposal for a fuel pricing formula to the Cabinet of Ministers next week, following discussions with the Ceylon Petroleum Corporation (CPC) and the Lanka Indian Oil Corporation (LIOC) this week. “We have decided with the LIOC to come to an agreement on a fuel pricing formula, which will benefit the consumers as prices rise and fall in the world market. This will be transparent and a proposal for this will be presented to the Cabinet next week, after discussions with the LIOC this week,” said Minister of Power and Energy Kanchana Wijesekera yesterday (2) at a media briefing. Under the United National Front-led administration, then-Finance Minister Mangala Samaraweera introduced a fuel pricing formula, which was scrapped after the Sri Lanka Podujana Peramuna-led Government came into power. However, in November 2021, a report issued by the Central Bank of Sri Lanka (CBSL) called for the reintroduction of a fuel pricing formula, noting that it is essential for the financial viability of the CPC and in turn, the stability of the banking sector. The CPC has struggled, especially in 2022, to import the necessary fuel stocks, due to a lack of funds for imports and a difficulty in opening letters of credit for imports, pushing the State institution into further debt. Wijesekera also said that a fuel stabilisation fund will be discussed for implementation. A fuel stabilisation fund was initially set up in 2020, but it is currently being audited by the Auditor General’s Department over discrepancies in the utilisation of approximately Rs. 47 billion of funding issued by the CBSL for this purpose.  Last year, then-Energy Minister Udaya Gammanpila claimed that he had also put forth a proposal for a fuel stabilisation fund in March 2021, which was only approved by the Cabinet in November 2021.


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