LIOC vary of Govt.’s fuel price cut talk

Wednesday, 27 October 2010 01:26 -     - {{hitsCtrl.values.hits}}

(By Sunimalee Dias)

The government’s claim of reducing fuel prices is considered an uncertainty in the wake of rising global oil prices.Lanka IOC Managing Director Suresh Kumar speaking to the Daily FT said yesterday that with the current high international fuel prices they do not expect much scope for a reduction in price and it “may not come down.”

Petroleum Resources Minister Susil Premajayantha on Sunday hinted at the possibility of a fuel price reduction within the next two to three months in view of Government procuring oil directly from producers instead of Singapore.

Currently the price of crude oil per barrel stands at US$82 while the price is US$92 for petrol and US$94 for diesel. In the global market expectations are that this price is likely to further increase by the end of this year and head towards US$85 for crude oil, US$95 for petrol and US$98 for diesel.

In the wake of these, LIOC Managing Director observed that unless the government opts to undertake structural changes in relation to duties and taxes it does not seem possible for a price reduction to be initiated.

Commenting on the company’s past interactions with the government requesting for an increase in the price of fuel, Kumar said they expect the Budget 2011 to take measures to stem the increase in price.

The market has seen a growth in the demand for fuel in the last six months with petrol forging ahead at 6-7% and diesel at almost 10%.

Kumar noted this growth trend in the demand for fuel is likely to continue in the future as well.

However, it was pointed out that there was a need to improve on the country’s infrastructure as customers had to be supplied products on time.

The Indian oil company has for the past several months been making representations to the government for an increase in the price of fuel due to the increases made internationally.

In this respect, Kumar noted that they would like to see a system in which the local prices would move in line with the international prices. If not this could result in under selling of the product.

India has in the last three months increased its fuel prices three times by about Indian Rs.4.