Fuel change

Monday, 13 February 2012 00:00 - - {{hitsCtrl.values.hits}}

THE inevitable has occurred. Fuel prices were increased in an unprecedented manner over the weekend and already the public is feeling the results as a bus strike hobbles people around the country, but it is yet unclear as to how the Government will deal with the issue.

The fuel increase does not come as a surprise for many. Global market pressures together with warnings from the President and more recently from Cabinet Spokesman Lakshman Yapa Abayawardana had outlined the pragmatic need and therefore the Government increasing prices would not have come as too much of a shock, but what stunned most was the largeness of the hike.

Upping petrol by Rs. 12, diesel by Rs. 31 and kerosene by Rs. 35 a litre, the Government authorised the biggest-ever jump in diesel and kerosene prices. Until Saturday, the price of a litre of petrol was Rs. 137, diesel Rs. 84 and kerosene Rs. 76. The increase of diesel and kerosene prices amounted to a massive 36.9 per cent and 49.3 per cent respectively.

The Government had outlined subsidy plans to private bus owners, but it would seem that the plans had not been implemented quickly enough to forestall strike action. In its typical inconsiderate style, at first glance it appears that the Government did not deeply consider the results of such a huge increase and therefore made little or no preparation to provide practical relief to the public. It can only be hoped that the proposed subsidies are implemented in a meaningful manner, without corruption and in a way that will directly assist the people.

With more and more vehicles adding to traffic congestion, the effect of the fuel prices will be strongly felt and it will undoubtedly add to the ever-growing burden of the cost of living. Given the global and local environment, it would be best to expect further increases in the months to come – therefore, what are the steps that can be taken to minimise the adverse results?

One would be to reduce the corruption within the Ceylon Petroleum Corporation (CPC) and its interconnected companies such as the Ceylon Electricity Board (CEB) that gets much of the subsidies but has its own challenges to face including initiating a transparent investigation as to why the Puttalam Coal Power Plant has faced so many breakdowns since its inauguration last year.

There has been little doubt that the massive corruption within the CPC has resulted in losses to the Government and while these excesses must be curbed, finding financial solutions to increasing fuel prices must also be monitored. The hedging fiasco is still fresh in the minds of many Sri Lankans and it would be foolish to repeat the same mistakes, but if a solution can be found then it should be adopted with the consultation of all stakeholders.

The Government recently proposed upgrading the public transport system by importing semi-luxury buses to reduce vehicle congestion. This is a positive move, but must be adopted on a large-scale more quickly. If fewer people used their personal vehicles, then the country’s fuel bill would be much lower as well. Reducing duty charges so that more people can import hybrid vehicles and thereby reduce fuel consumption and promoting other forms of green energy are the other obvious paths to take.