Sri Lanka, the small island of Indian Ocean, has been badly hit by fuel price hike. In the beginning of the New Year, Sri Lanka’s state owned oil company, The Ceylon Petroleum Corporation (CPC), has declared a 5% increase in fuel price. I am quoting from the report published in lankabusinessonline:
Gasoline prices in Sri Lanka will go up by 5-percent, to keep pace with rising world oil prices that are currently hugging the 60 dollars a barrel mark, the government said Thursday.
With effect from Friday, petrol at the pump will cost 97.00 rupees, Ceylon Petroleum Corp. Chairman Asantha de Mel said.
The price hike will also cover Indian fuel retailer Lanka IOC, which controls a third of the local fuel market.
The price revision does not cover diesel and kerosene, which current sells at 60.00 rupees and 48.00 rupees a litres respectively, he said.
A net oil importer, Sri Lanka's fuel bill climbed up to around to 2.2 billion dollars last year, from 1.6 billion in 2005.
CPC chairman said that they could not maintain the retail price because of the increase of oil $60 per barrel in international market. Another major reason behind this price increase is that Sri Lanka does not produce any oil. In addition, last year, during November, Sri Lankan rupee depreciated by 5%.
CPC controls two third of Sri Lanka’s fuel market. The rest one third is controlled by Lanka Indian Oil Corporation (LIOC). Because of Sri Lanka’s financial crisis LIOC observed a loss and stop supplying fuels in June last year. Recently, Sri Lanka has made an agreement worth $47.8 million with LIOC. Under this new deal, the company was forced to cut its profit margins.
Although a small country, Sri Lanka has observed an increase in fuel consumption over the years. The same thing is happening in all the countries around the world. I am not sure whether we would be able to find alternatives for fuel in a short period but countries like Sri Lanka that do not produce fuel should think about switching to alternative power source from now on or else they would face severe financial problems.
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Lanka Business Online
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