Widest difference in fuel pricing formula since LIOC’s entry in 2003
By Shamindra Ferdinando
Former Energy Minister Udaya Gammanpila says Lanka-India Oil Company (LIOC) has effectively taken itself out from the local petroleum market and is pricing its products in line with economic realities.
The LIOC has achieved that objective by keeping its diesel and petrol prices (per litre) Rs 77 and 92 , respectively, higher than those of Petroleum Corporation (CPC), the leader of the Pivithuru Hela Urimaya says.
Having increased diesel and petrol prices on 06 Feb. and 25 Feb, 202, causing a price difference of Rs. 17 and Rs 27, per litre of diesel and petrol respectively, the LIOC has widen that margin, the widest since its entry into the Sri Lankan market in 2003.
President Gotabaya Rajapaksa removed Gammanpila from ministerial portfolio on 03 March within 24 hours after a group of dissident constituents of the ruling Sri Lanka Podujana Peramuna (SLPP)) unveiled an alternative economic plan.
Responding to The Island queries, lawmaker Gammanpila said that the LIOC couldn’t be faulted for seeking to curtail losses. In terms of an agreement Sri Lanka entered into with India in respect of the LIOC’s entry into local market, the Indian enterprise had the right to increase its prices unless Sri Lanka absorbed the losses.
Attroney-at-law Gammanpila emphasized that current Ceypetco pricing formula didn’t reflect crude oil prices in the world market, which were rising even higher mainly as a result of the war in Ukraine.
Gamini Lokuge succeeded Gammanpila as the energy minister while Pavitradevi Wanniarachchi received the power portfolio, which was previously held by Lokuge.
MP Gammanpila said that the latest hike would make it impossible for the vast majority of people to pump diesel or petrol at LIOC service stations. However, those living in some areas would experience difficulties as they were serviced by LIOC. In terms of the 2003 agreement, LIOC took over one third of service stations at that time managed by the CPC. At the time of the agreement, the countrywide CPC network comprised 300 service stations. Today, LIOC operates 211 service stations.
LIOC blamed rising international prices due to a variety of reasons, including the Russian invasion of Ukraine for increasing its pricing formula for increases announced on Feb 06 and Feb 24 though the latest was blamed on what the Indian enterprise called a significant depreciation of the Lankan Rupee against the USD.
In a statement issued late Thursday night, the LIOC quoted its Managing Director as having said that the depreciation of the Rupee twice in a span of seven days by Rs 57 against USD has directly impacted the landed cost of Gasoil and Gasoline making them dearer by an equivalent amount per litre. Oil and gas prices are also surging as western countries respond to Moscow’s invasion with numerous sanctions to isolate Russia and cut it off from global oil markets. Our current losses are exorbitantly high considering current international prices leaving no other option but to increase the prices of Gasoil and Gasoline. However, it is a painful reality that even after this price increase, there would still be heavy losses at the prevailing international prices.”
LIOC MD Gupta emphasized that LIOC did not receive any subsidy from the Government of Sri Lanka and its losses were calculated based on actual landed cost of the product after considering payment of applicable duties, taxes and other statutory levies including handling charges.
Former Minister Gammanpila said that the country lacked the wherewithal to meet the economic crisis. “There is no point in denying that fact. The sacking of Wimal Weerawansa and Udaya Gammanpila wouldn’t make a difference at all, the PHU leader said, urging the government to work out a proper strategy at least now.
Lawmaker Gammanpila recalled his efforts to establish a special fund to cushion the impact in case of steep increase in fuel prices. The former Minister alleged that his proposal that had been made in March 2021 didn’t find favour with the Finance Ministry. Even after a cabinet sub-committee endorsed the proposal in Oct. 2021, the Finance Ministry simply ignored it, the MP alleged.
Gammanpila said that regardless of repeated assurances given by the government regarding the normalization of fuel supply, the LIOC increase would bring the entire Ceypetco distribution under tremendous pressure. The former Minister pointed out that the LIOC sales volumes would drop sharply to such an extent it would no longer matter.
BASL urges President to de-escalate tensions in different parts of country
The Bar Association of Sri Lanka has called upon President Gotabaya Rajapaksa to instruct the Defence Secretary, the Commanders of the Tri Forces and the Inspector General of Police to ensure that there is an immediate de-escalation of tensions in different parts of the country – especially at fuel stations – understanding the difficulties faced by the public.”
“Whilst keeping in mind that the police and armed forces are acting under very trying circumstances, nevertheless it is necessary to give strict instructions to the police and the forces to desist from violence in dealing with the public and to act with utmost restraint”, the BASL has said in a media statement.
“We also call upon you to ensure that steps are taken under the law to deal with errant officers who have subjected civilians to such violence.”
The BASL is of the view that it is not appropriate for service personnel to be deployed in the present manner in matters which essentially should be managed by the Sri Lanka Police.
The armed forces should also not be used to disturb or hinder peaceful protests as was seen last week in Galle.
Full text of the BASL letter to the President:
The Bar Association of Sri Lanka (BASL) expresses its gravest concerns at the current situation at fuel stations throughout the country and the reports of several incidents of conflicts between civilians and members of the police force and the armed forces at fuel stations. There has been video footage of civilians being assaulted by personnel of the armed forces and the police, the latest being of a civilian being kicked by an Army officer at a fuel station. There have also been situations of the police and Army opening fire into the air to contain the crowd.
Your Excellency is no doubt aware that thousands of desperate civilians are waiting in queues at hundreds of fuel stations in the country. The queues are kilometres long. The tension at the fuel stations have arisen from this desperation for which there is no immediate solution in sight.
The BASL wishes to warn Your Excellency of the imminent dangers this situation could give rise to. The present unrest could result in a conflagration between civilians and members of the armed forces or the police. Some years ago, confrontations between members of the public and the armed forces resulted in the deaths of civilians. Such incidents between the members of the armed forces or the police and the civilians will discredit Sri Lanka’s armed forces and the police.
We call upon Your Excellency to take all necessary steps to give instructions to the Defence Secretary, the Commanders of the Tri Forces and the Inspector General of Police to ensure that there is an immediate de-escalation of the situation in different parts of the country – especially at fuel stations – understanding the difficulties faced by public. Whilst keeping in mind that the police and armed forces are acting under very trying circumstances, nevertheless it is necessary to give strict instructions to the police and the forces to desist from violence in dealing with the public and to act with utmost restraint. We also call upon you to ensure that steps be taken under the law to deal with errant officers who have subjected civilians to such violence.
The Sri Lanka Army and other service personnel must be deployed only in very limited circumstances as contemplated in the Criminal Procedure Code. The BASL is of the view that it is not appropriate for service personnel to be deployed in the present manner in matters which essentially should be managed by the Sri Lanka Police. The Armed Forces should also not be used to disturb or hinder peaceful protests as was seen last week in Galle.
We trust that this will receive the immediate attention of the Government as to do otherwise may otherwise result in unprecedented turmoil and harm.
The BASL believes that the ultimate solution to the situation at fuel stations is to be transparent with the public and to ensure an equitable and effective system of fuel distribution throughout the country.
SC orders AG to submit report on fuel purchases and distribution
By A.J.A. Abeynayake
A three-member Supreme Court bench consisting of Justices Vijith Malalgoda, Mahinda Samayawardena and Arjuna Obeysekera yesterday ordered the Attorney General to submit a report on fuel purchases, the distribution thereof and the sectors to be provided with fuel on a priority basis.
The Supreme Court made the order after considering two fundamental rights petitions presented by the Bar Association of Sri Lanka.
The BASL has requested the Supreme Court to direct the Cabinet of Ministers to consult all stakeholders and independent experts to formulate and implement the necessary policies, and to provide concessions in relation to the prices of essential goods and services to the people including LP gas, fuel, electricity, milk powder, medicines and food.
The petitions were filed by the President of the BASL Saliya Pieris PC, Deputy President Anura Meddegoda PC, former Secretary Rajeev Amarasuriya, Treasurer Rajindh Perera and the Assistant Secretary Pasindu Silva.
A/L may be delayed by one month
Education Minister Sushil Premajayantha told Parliament yesterday that although it had been scheduled to hold the G.C.E. A/L Examination 2022 in November this year, it could be further delayed by another month.
Responding to a question by MP Shantha Bandara, the Minister said: “The examination should be held at least after three months of releasing the results of the previous A/L exam because the students who need to sit it again should have enough time to prepare,” the Minister said.
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