Tuesday, 24 December 2013 00:01
When times get tough, toothless threats are trotted out. Fettered with ever-increasing fuel bills, the Petroleum Ministry has threatened to limit supply if their outstanding bills are not settled. Yet, since such a hollow statement was made in March and several times before that by previous ministers, it is not likely to get much traction.
The Petroleum Industries Ministry has insisted it will enforce with immediate effect a maximum two-month credit limit for State institutions to pay their fuel bills, Minister Anura Priyadharshana Yapa was quoted as saying in a news report over the weekend.
A disgruntled Minister had said supplies would be discontinued if the arrears were not paid within two months. Concessionary terms would also be withdrawn. Among the main institutions which owe the CPC large amounts are SriLankan Airlines and Mihin Lanka. The two airlines owe the CPC a staggering Rs. 30 billion, up from Rs. 27.4 billion reported when the previous threat was made in March 2013.
The Ceylon Electricity Board (CEB), the Railways, the Sri Lanka Transport Board, the Ministry of Economic Development, the armed forces and the Police are among those other institutions which together owe the CPC more than Rs. 108 billion.
Yapa’s complaints have deeper resonance for the public as higher losses at the CPC gives birth to rumblings of a price increase on the people. As the cost of living soars in the days before the New Year, most people fear the statements on losses are a precursor to another hit on their already-strained wallets.
With no efforts being made to introduce a transparent and flexible pricing scheme and improve financial accountability, the CPC continues to be a problem. It is interesting to note that Yapa’s last round of threats in March came on the heels of a hefty price hike for the public. Subsequently, people were slapped with a massive electricity tariff increase and just last month an increase in bus fares. Therefore, it is clear that when the CPC ails, everyone gets sick.
Even the newly-approved Budget 2014, despite commending the CEB and the CPC for maintaining healthier balance sheets, failed to note that this is largely due to higher rains rather than any special effort by officials. The Budget also did not put in place structural changes and anti-corruption measures that would have made this change sustainable. In fact the CEB regardless of using more hydro-power in 2013 failed to pass that benefit on to the consumer.
It is therefore worth considering why such massive amounts were allowed to be racked up by institutions and whether they can be rationalised to provide maximum benefit to the consumer. In this vein, it can be pointed out that the billions in arrears accumulated by the military would be one place to start. Given the whopping Budget allocation for the defence sector, which is larger than any other, it would seem that they are in the best position to repay their debts to the CPC so that it in turn can concentrate on areas more central to economic development of the country at large.
Caught in a financial black hole, it is clearly time to introduce some transparency and good governance to Sri Lanka’s petroleum sector. But it would seem that only band-aid solutions are preferred by the Government.