Cabinet green-lights fuel surcharges to be sent to stabilisation fund

Friday, 29 May 2020 00:00 - - {{hitsCtrl.values.hits}}

Cabinet paper presented by PM approved
Income from fuel surcharge to be sent to special fund administrated by Treasury
Fund to be used to repay CPC dues, put it on stronger financial footing
Bandula argues fund will give relief to public in long term

Cabinet yesterday gave the green-light for two Gazettes issued by the Finance Ministry imposing fuel surcharges, and said the income would be funnelled into a special fund that will be used to repay dues owned by the Ceylon Petroleum Corporation (CPC).

The fuel surcharges would reduce pressure on the public, argued Cabinet spokesman Bandula Gunawardana, who pointed out that usually the tax payer had to fund the losses of the CPC via the Treasury. The Cabinet Paper was presented by Prime Minister Mahinda Rajapaksa.

“By establishing this fuel stabilisation fund, the income from the fuel surcharge will be used to pay the bills owed by the CPC to other Government entities such as the Ceylon Electricity Board (CEB). This means that the losses of these large State Owned Enterprises (SOEs) will be lower, and once they have been placed on a better financial footing, the fuel price can be reduced in a sustainable way to give relief to the public,” he argued.

Gunawardena also contended that the issue of SOE losses had to be tackled by every Government, but different administrations used different systems to manage the shortfall. “The previous Government had a fuel price formula, and prices were adjusted frequently so any increase in international oil prices were passed down to the consumer. Our system is different. That is all. But the point is to ensure that SOE losses are managed and relief passed to the consumer when possible.”

The fuel stabilisation fund will be under the oversight of Treasury officials under the Finance Ministry, which is part of Prime Minister Mahinda Rajapaksa’s portfolio.