By Dianne SilvaWith the Brent crude oil prices hitting US $ 100 per barrel on Monday-for the first time since 2008- Lanka Indian Oil Company PLC (LIOC) has reiterated its stance to the Sri Lankan government for a hike in fuel prices, according to a senior company official.
"We have been asking the government for the last three weeks and forwarded documents to the relevant Ministry and to the Ministry of Finance requesting for appropriate action be taken to mitigate the losses we are incurring due to increasing crude oil prices in the international markets" LIOC Managing Director Suresh Kumar said.
"Whether it is the reduction of the levy or increase in domestic prices- the government should decide the most suitable action to mitigate the serious losses we are incurring" he added.
LIOC has been further beleaguered by the fact that it did not receive the recent duty reduction, of Rs.10, for its January imports.
"Our imports arrived on January 8, 2011 and the duty reduction was on the 11th- therefore we were unable to reap the benefits of this reduction," he said.
Kumar also said that despite informing the government, well in advance, of the timing of their imports no action had been taken to ensure that LIOC benefited from the reduced levy.
At present LIOC incurs a loss of Rs.16 per litre of petrol and Rs.21 per litre of diesel.
"If we were at least given the benefit of the reduced levy, this loss would be mitigated by Rs.10 in each case," he said.
The surge in Brent, which has climbed from $70 a barrel in August 2010 on rising global demand, has also stirred worries in consumer nations that a hike in fuel prices could stall a global economic recovery.
Officials from the Organization of the Petroleum Exporting Countries (OPEC) said that there is no shortage of oil in the market and no need to increase production right now, despite increase in prices in the world market.
However according to local analysts Sri Lanka ultimately will have to go for a fuel price hike, in the back drop of the rising inflationary situation.
"Even if the government likes it or not, specially when there is going to be an election, they will have to go for a fuel price revision given the increasing crude oil prices in the world markets" an analyst on the grounds of anonymity commented.
Sri Lanka's inflation for the month of January 2011 declined marginally when compared with the month of December 2010. However inflation in January rose 6.8 percent Year on Year, according to Central Bank data released on Monday.
To keep prices under control, the government last week reduced import taxes significantly on milk powder to 28 rupees a kilogram
Govt. closely monitoring prices-Petroleum Secy.
.By Sandun A. Jayasekera
The Petroleum Industries Ministry was closely monitoring the situation in the global oil market as the price of a barrel of crude oil hit the US$ 100 mark on Monday, Ministry Secretary H.T.M.Jayawardana said.
Responding to the DM Business on the request by LIOC to permit them to increase the fuel prices in the domestic market following the rapidly increasing oil prices, Jayawardana said the government recently reduced the import tax levied on a litre of petrol to Rs. 5.00 from Rs. 15.00, depriving huge revenue to the Treasury.
"The government reduced the import tax by Rs. 10.00 to minimize the impact of the increase of the global oil prices on the local market. The government is not in a position to increase the oil prices right now. Therefore the government would resort to the best possible option after closely monitoring the situation in the global market," Jayawardana emphasized.
He also pointed out that the Ceylon Petroleum Corporation (CPC) incurs the biggest loss due to the upward trend in the global oil market as the CPC imports some 50 million liters of petrol a month as the market leader. The IOC imports about 15 million liters of petrol a month.
source - www.dailymirror.lk
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