News

Fuel price hikes: No immediate reduction in prices  

  • Gammanpila cites CPC loans, dwindling foreign reserves 

  • CPC suffers Rs. 57 b loss for year’s first half 

  • Foreign reserves sufficient only for 3 months’ imports 

  • $ 300 m per month for petroleum imports    

By Yoshitha Perera

 

In a backdrop of existing loans taken by the Ceylon Petroleum Corporation (CPC) and the limited foreign currency reserves at the Central Bank, Energy Minister and Cabinet Co-Spokesman Udaya Gammanpila informed The Sunday Morning that no immediate decision will be taken to reduce the fuel prices that were recently increased. 

In an interview with The Sunday Morning, he said that the CPC has obtained loans amounting to $ 3 billion and that the Corporation has recorded a loss of Rs. 57 billion for the first half of this year. 

He added: “The decision to increase the prices of fuel was taken 21 months after the price of crude oil increased in the world market. The Cabinet Sub-Committee on the Cost of Living headed by the President and the Prime Minister decided on the hike of fuel prices, considering the ongoing losses of the CPC.” 

Minister Gammanpila further added that the Central Bank advisory note dated 30 May 2021 had mentioned that Sri Lanka has very limited foreign currency reserves, which would suffice to allow for imports only for a period of three months. 

“Due to this reason, we have to manage and control the demand for imported petroleum products, and by discouraging the use of fuel, we are trying to save our limited foreign exchange reserves to import the essential commodities required for our local economy.” 

Gammanpila also said that in order to meet the high demand for imported petroleum products, the Government has to spend around $ 300 million each month for importation, and that the Government had therefore decided to increase the fuel prices in order to manage the demand for the imported petroleum products.