No end to hooks at the pump

Saturday 19th February, 2022

The government is planning to jack up fuel prices, again, claiming that the Ceylon Petroleum Corporation (CPC) is incurring huge losses. An attempt is apparently being made in some quarters to scapegoat Energy Minister Udaya Gammanpila for the fuel price increases in the pipeline. When oil prices were increased on a previous occasion, some SLPP MPs loyal to Basil Rajapaksa flayed Gammanpila for aggravating the woes of the public; they insisted that if Basil had been in the country, he would have prevented a fuel price hike. Today, Basil is the Finance Minister, but fuel prices are increased!

Gammanpila has sought to deflect public criticism; he has written to the Finance Ministry requesting that taxes on fuel be slashed to prevent a fuel price hike. It is a clever political move, which may help disappoint the SLPP’s Basil faction, which is trying to pin the blame for fuel price hikes on Gammanpila; the ball is now in Basil’s court.

What one gathers from some facts and figures Minister Gammanpila happened to reveal at his media briefing yesterday is that the real cause of the CPC’s losses is the domestic taxes and not the increases in the world market oil prices as such.

Minister Gammanpila told the media yesterday that the CPC’s daily losses amounted to Rs. 551 million. The CPC, according to him, loses Rs. 19 from a litre of 92 Octane petrol, Rs. 17 from a litre of 95 Octane petrol, Rs. 52 from a litre of regular diesel, Rs. 35 from a litre of super diesel and Rs. 63 from a litre of kerosene. In the same breath, Gammanpila said the government taxes amounted to Rs. 42 on a litre of 92 Octane petrol, Rs. 64 on a litre of 95 Octane petrol, Rs. 17 on a litre of regular diesel and Rs. 39 on a litre of super diesel. This may explain why decreases in the world market prices are not reflected at the pump, here.

The CPC’s revenue ends up in the Treasury, and therefore, in the final analysis, it is only from the sale of regular diesel that the state coffers, which rake in unconscionably high fuel taxes, suffer losses. Where other types of fuel are concerned, the Treasury is not incurring losses; only its profits have decreased to some extent. However, Minister Gammanpila has said the government taxes on fuel amount to Rs. 367 million a day. Thus, it may be seen that the actual loss that the CPC causes to the state coffers is only Rs. 184 million a day. Minister Gammanpila should have explained what actually caused this loss; is it due to the fact that the volume of regular diesel (which causes an actual loss of Rs. 35 per litre) sold daily is much higher than those of super diesel, petrol and kerosene, and/or other factors such as overdue payments. An explanation is called for.

If fuel prices are jacked up again, inflation will increase further, worsening the ordinary people’s lot. The prevailing pandemic and the resultant economic downturn have reduced many people to penury, and they must not be burdened with any more price hikes. One may ask whether Minister Gammanpila’s request to the Finance Ministry for slashing taxes on fuel is pragmatic in that no government can do without taxes on petroleum products, but the fact remains that the incumbent administration has given huge tax cuts to its cronies at the expense of the public, and relief could be given to the public if it acts rationally without adopting ad hoc relief measures for political reasons.

The government has, in its wisdom, allocated as much as Rs. 229 billion for the provision of relief mostly to the state sector workers. Even the teachers who won a massive pay hike recently are given Rs. 5,000 each as a special monthly allowance! If at least a part of this huge relief package had been utilised to cushion the CPC’s losses which are mainly due to the sale of diesel, the lifeblood of public transport, everyone would have benefited immensely, and a further increase in inflation could have been obviated.