Sri Lanka’s state-run oil and gas entity Ceylon Petroleum has raised the price of petrol by 77 Rupees (LKR - Sri Lankan Rupees) and diesel by 55 Rupees after Lanka IOC, the local subsidiary of India’s oil major Indian Oil Corporation, hiked fuel prices in the island nation. IOC had raised petrol and diesel prices by 50 Rupees and 75 Rupees respectively.
The Ceylon Petroleum Corporation (CPC) price hike has seen the price of Octane 92 petrol rising by 43.5% to a record 254 Rupees a litre while diesel soaring 45.5% to 176 Rupees. The latest Octane 92 petrol price is in par with Lanka IOC price while the diesel is still 38 Rupees below the Lanka IOC price.
“With lower prices at Lanka IOC, everyone was going there and we had to correct our own loss making,” Energy Minister Gamini Lokuge said.
Lanka IOC does not receive any subsidy from the Sri Lankan government and its losses are calculated based on actual landed cost of the product after considering payment of applicable duties, taxes and other statutory levies including handling charges. CPC Chairman Sumith Wijesinghe said that the State was losing 128 Rupees from each litre of diesel as of March 10 and 80 Rupees from a litre of petrol.
The fuel price hike came on the back of the central bank’s decision on Tuesday to announce a flexible exchange rate, causing the Rupee to depreciate by over 30% by Thursday. The depreciation has sent most prices in a tailspin. While most consumer items have already seen price increases, the government announced that a 29% hike for medicine would be allowed.
The cellular phone operators said that their items would increase by over 30% while all air tickets purchased here would cost 27% more due to the Rupee depreciation. Last month, the Sri Lankan government decided to purchase 40,000 metric tonnes each of petrol and diesel from the Indian Oil Corporation as part of its ongoing efforts to tide over the current fuel and energy crisis.
Lanka IOC, the Sri Lankan subsidiary of India’s oil major Indian Oil Corporation, has been in operation in Sri Lanka since 2002. Sri Lanka in the recent weeks has been mulling different options to facilitate measures to prevent fuel pumps from going dry, as the country was faced with a severe foreign exchange crisis to pay for its imports.
Sri Lanka is currently facing a severe foreign exchange crisis with falling reserves. The country is grappling with a shortage of almost all essentials, due to the lack of dollars to pay for the imports. In January this year, the Indian government had announced a billion-dollar assistance package in addition to other balance of payment support to Sri Lanka.
