Gammanpila urges ‘immediate implementation’ of fuel pricing formula
a year ago
BY Pamodi Waravita Energy Minister Udaya Gammanpila said yesterday (23) that he approves implementing the fuel pricing formula, if the reestablishment of the Fuel Price Stabilisation Fund (FPSF), which he had proposed earlier this year, is not approved by the Cabinet of Ministers. “When the world market prices of fuel increase whilst the fuel prices in Sri Lanka remain unchanged, it is the local taxpayer that will ultimately be burdened. Millionaires in the country have luxury vehicles that use up to one litre of fuel for only about five kilometres of travel. However, that fuel cost is also ultimately borne by the people of this country who may never have seen a luxury vehicle in their lives, through the value-added tax (VAT) on other essential goods. In a country such as Sri Lanka, the cost of fuel heavily impacts the living and production-related costs. This is why I proposed the reestablishment of the Fuel Price Stabilisation Fund which is yet to receive approval from the Cabinet. If that is not approved, then, at least the fuel pricing formula should be immediately implemented, as proposed by the Central Bank of Sri Lanka (CBSL) recently,” said Gammanpila, while speaking in Parliament yesterday. This comes after a report titled “Recent Economic Developments” was released by the CBSL last month which highlighted the need for “cost reflective pricing mechanisms for petroleum products in order to ensure the financial viability of the Ceylon Petroleum Corporation (CPC)”. It further added: “Needless to say, a pre-determined formula can also pave the way for a quick pass-through of the benefits of any price decline in global markets.” Furthermore, speaking in Parliament last week, Justice Minister President’s Counsel M.U.M. Ali Sabry requested Finance Minister Basil Rajapaksa to consider the proposal by the CBSL to reintroduce a fuel pricing formula. Treasury Secretary S.R. Attygalle, speaking to The Sunday Morning last Sunday (21), said that the Finance Ministry would implement the fuel pricing formula if there are no objections raised by the Government. However, the incumbent Sri Lanka Podujana Peramuna (SLPP)-led Government was highly critical of the fuel pricing formula when they were in the Opposition from 2015 to 2019. The Morning reported in June 2021 that the FPSF – set up in April 2020 to ensure that local retail fuel prices remained unaffected by global oil price fluctuations – had been exhausted. Top sources at the Energy Ministry told The Morning at the time that the FPSF, which had accumulated almost Rs. 20 billion at one point, was empty as it had been used to settle outstanding payments owed by the Ceylon Electricity Board (CEB) to the CPC. Thereafter, the relevant amount has been used by the CPC to settle a loan which was owed to the Bank of Ceylon (BOC) and the People’s Bank. Gammanpila submitted a cabinet paper to the Cabinet in April 2021 to re-establish the FPSF, for which cabinet approval is yet to be granted.