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The Central Bank yesterday backed a fuel hike saying “cost-reflective” price adjustment was in the best interest of all stakeholders.
“Given the permanent rise in global prices, an upward adjustment of the cost of fuel is the right thing to do,” CBSL Governor Nivard Cabraal told journalists yesterday.
He suggested that it was creditable on the part of the Government to have not burdened the consumer thus far by keeping fuel prices as they are, but given the constant rise, it was in the best interest of CPC and the banking sector to go for a cost-reflective pricing on a holistic manner,” Cabraal said, adding failure to do so would cause more vulnerabilities.
“Governments always try to delay imposing any additional burdens on the people but there is a limit to how long it could be done,” Cabraal argued.
He said the CBSL would support Government efforts to maintain price stability in the event fuel prices are increased, which usually has a one-off effect on inflation.
“Despite commodity prices being on the rise due to supply-side issues and recent adjustments locally, inflation will not go to double digit level but we will maintain it at single digit level,” Cabraal assured.
Citing a Rs. 70 billion-loss up to August, the Ceylon Petroleum Corporation (CPC) this week urged the Government to revise fuel prices given the global spikes.
In order to give relief to the people, the Government kept fuel prices unchanged for over 20 months from 10 September 2019. However, with increased world oil prices in April, the Government had to revise prices upward in June.
CPC import prices in August were $ 74.88 per barrel, up from $ 68.92 in July and $ 57.65 in January this year. In the one-year period ending July, crude oil prices have increased by 49% to $ 68.92 per barrel.
Fuel imports in July rose by 28% to $ 256 million, of which refined petroleum amounted to $ 160 million, up by 22%. In the first seven months, fuel imports rose by 41.5% to $ 2 billion and refined petroleum by 51% to $ 1.5 billion.
