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Minister of Energy Udaya Gammanpila[/caption]
Losses incurred from maintaining local oil prices since September 2019 are expected to be offset, following the establishment of a local oil refinery that is estimated to bring in $ 200 million per annum, The Sunday Morning Business learns.
Speaking to us, Minister of Energy Udaya Gammanpila stated that fuel prices will not undergo any revisions in the near future due to the Covid-19 pandemic that has upended the daily lives of the people, but that the accumulated losses can be recovered through the planned oil refinery and bunkering facilities.
“Firstly we’re going to have a new oil refinery which will result in a massive saving of around $ 200 million per annum,” he told The Sunday Morning Business. “We have also diversified our portfolio and have recently re-entered the bunkering sector in supplying ship fuel, so we are trying to have a lubricant plant in Sri Lanka, among other things. We hope this diversification will balance, or even set off, the losses caused by the current petrol and kerosene prices.”
The country’s fuel prices were last increased on 1 September 2019, when the global price of a barrel of crude oil was approximately $ 60. However, while global prices increased by $ 12, the local prices remained the same, in spite of the losses faced by the Ceylon Petroleum Corporation (CPC).
The state is currently in the process of taking steps in order to protect the CPC and balance out the losses faced, Gammanpila added.
“It is true that we have not revised oil prices for the past 21 months,” Gammanpila said. “A price revision is overdue, but we’re struggling to hold it as it is for as long as possible, considering the present plight of the ordinary people. Therefore we have not yet made a decision to revise the prices.”
According to Gammanpila, before the Lanka Marine Services was privatised, the CPC was making great profits from the bunkering business, which was used to cross-subsidise kerosene oil. Thus, due to the current situation, the Ministry is taking measures to re-enter the business by bulk-buying bunkers for all the small players before entering the market on a competitive basis.
When the Coronavirus pandemic hit in 2020, resulting in an island-wide lockdown from March to May, the daily demand for petrol and diesel dropped by around 80%, according to reports. This in turn resulted in the CPC’s daily supply dropping from 2,300 metric tonnes of petrol to 150 metric tonnes, while diesel supply dropped to 500 metric tonnes from 4,300 metric tonnes.
Further, he added that the sub-committee appointed for the oil stabilisation fund is currently in the process of discussions.