In an unorthodox move, Sri Lanka government jacked up fuel prices this month despite declining international petroleum prices and the appreciating of the rupee while disregarding fuel pricing formula.
According to the pricing formula, Singapore Platts per Barrel and Exchange Rate are two uncontrollable variables. Other components are either controllable variables or fixed components.
Therefore the price of fuel should come down this month slightly and there was no way that it should go up in accordance with the fuel pricing formula introduced by the Finance Ministry, leading mathematicians in the country argued.
Taking refuge under Easter Terror, the present administration is now pushing the people who are battered by extremist terrorism and fear psychosis into economic difficulties by indirect taxation, fuel price hikes and other monetary policy measures, Citizen’s groups claimed.
The oil price for Brent crude oils in May was 71.42$ per barrel while the price was 71.23$ per barrel in April of 2019. Over last twelve months the price has fallen 7.22%.
Crude oil prices are expected to average $66 a barrel in 2019 and $65 a barrel in 2020, the World Bank said.
During the year up to 10 May 2019 the Sri Lanka rupee appreciated against the US dollar (4.1 per cent).
Under this set up there was no way fuel price hike this month unless the government has been forced to increase the tax component for defense and tourism damage control funding in the aftermath of eater Terror, Citizen’s groups said.
The final price of fuel, according to the formula, is determined by the landed cost (V1), processing cost (V2), administrative cost (V3) and taxation (V4) and accordingly (Maximum Retail Price = V1 + V2 + V3 + V4. Tax for Diesel is Rs 25.48; Tax for Petrol is Rs 53.68.
Accordingly, 92 Octane petrol was increased by Rupees 3, 95 Octane Petrol by Rupees 5 and super diesel by Rupees 2. Meanwhile, the price of auto diesel remains unchanged.
The Consumer Protection Organization points out that the increase in fuel price is unreasonable. Chairman of the Consumer Protection Organization Ranjith Vithange noted that there is a reason for everything; likewise, the reason for the increase in fuel price is the 225 MPs in parliament.
He noted that it is the general public that maintains the 225 MPs in parliament and the cost to maintain these MPs is approximately Rs. 700 million per month. He pointed out that the Government has imposed a tax on onions, dhal, potatoes and even rice.
(LI)