Finance Ministry to have final say on fuel price hike

Wednesday, 13 October 2021 00:29 -     - {{hitsCtrl.values.hits}}

  • Treasury tasked to decide and find methodology on revision
  • Trade Minister cautions on looming economic crunch
  • Says Govt. to increase prices with great awkwardness
  • Describes 2020 and 2021 as poorest years in world history 
  • Asserts CPC oil price adjustment is inevitable 

The Government yesterday said the Finance Ministry would decide on the timeline to make the upward price revision on fuel after exploring a suitable methodology amidst a looming economic crisis post-COVID pandemic.

“As the winter season begins, the crude oil prices have skyrocketed by 130% in the world market. Unfortunately, whether we like it or not, when it’s a good that’s not being produced in our country, we have to purchase it at the world market price,” Trade Minister Bandula Gunawardena said at the post-Cabinet media briefing yesterday.

Following the request made by the Ceylon Petroleum Corporation (CPC) for an upward price revision, the matter was taken up at the Cabinet meeting on Monday.

Gunawardena said the forecast was that crude oil barrel price would shoot up to over $ 100 in the next few days and in tandem prices of oil, gas, milk powder, dhal and all products imported would rise.

“Already shipping containers are not available or the charges have increased by 300%, freight charges have shot up by 500%. Just because we are an island nation, there is no escape from all these adverse impacts,” he stressed.

The Minister pointed out that the usual norm of a post-pandemic, it leads to a food crisis, followed by closures of manufacturing plants, disruption in production, unemployment, hunger and malnutrition.

“This is a global scenario and it is with great awkwardness that we also announce the price hikes, as we feel it too,” he said, adding that 2020 and 2021 were the poorest years, amidst an unprecedented COVID pandemic.

He pointed out that economic-powerhouses and neighbouring countries in South Asia too were faced with the same situation, yet no one highlights it.

Gunawardena justified the Energy Minister’s remarks on Monday to call for a price hike in oil prices, adding that adjusting prices in line with world market prices was inevitable.

As per the CPC, the estimated loss for this month is Rs. 10 billion on top of Rs. 70 billion in the first eight months. “If the CPC crashes, then we have no way of sourcing oil and gas. Therefore, a price adjustment is inevitable,” he added.