Even amidst the drastic drop in oil prices to US$24.42 a barrel, the lowest levels since June 2002,at present, the government will be maintain local fuel prices at a stable level for one month without passing the economic benefit to the people.
Sri Lanka will keep oil prices fixed and build a Rs200 billion ffuel price stability fund, as the ongoing corona virus pandemic hampers oil demand bringing down the prices, Minister Bandula Gunewardane told a media conference on Thursday19..
Taxes are being levied on fuel to increase state revenue from oil distributors and build this fund, which will be used to repay debt of the Ceylon Petroleum Corporation and Ceylon Electricity Board.
The price of light crude oil is down 60% so far this year. At the same time, Russia and Saudi Arabia are failing to limit supply.,Russia is refusing to cut production while Saudi Arabia cut prices and increased production in an already over-supplied market
Under this set up the government is planning to keep fuel prices fixed for the next 12 months, he said.
Sri Lanka’s new administration halted a fuel pricing formula after coming to office in November 2019.
Minister Gunewardene said in 2018, though there was a price formula the Ceylon Petroleum Corporation had incurred a loss of over Rs.100 billion.
Oil prices in the county face an “inevitable fall” to around $20 during the second quarter, which would be down from previous forecasts of a $29 per barrel. But the government will not reduce oil prices he added.
Most of the losses however had come from a foreign exchange loss, where the CPC had borrowed or had been forced to borrow dollars
(LI)