CPC to bleed despite Rs. 41 b fuel subsidy
Corporation absorbs approx. Rs. 66 loss per litre of auto diesel
3-month losses yet to be calculated as Govt. splits burden among State, suppliers, consumers
Private fuel suppliers also facing losses due to higher landed costs The Ceylon Petroleum Corporation (CPC) is set to continue incurring substantial losses on fuel sales over the next three months despite the Government committing Rs. 41 billion in subsidies and raising domestic fuel prices, with the corporation currently absorbing an estimated Rs. 66 loss on every litre of auto diesel sold.The total losses expected to be incurred by the CPC and other fuel suppliers during the three-month subsidy period were yet to be calculated, Ministry of Energy Secretary G.M.R.D. Aponsu told The Sunday Morning.
The Government has adopted a three-way cost-sharing mechanism under which the State, fuel suppliers, and consumers will share the burden arising from higher international petroleum prices.“One party is the Government. The second comprises all four players – the CPC, Lanka IOC, Sinopec, and RM Parks. The third party is the general public, or consumers,” Aponsu said.The Government has approved a Rs. 41 billion relief package for three months, providing a subsidy of Rs. 70 per litre on auto diesel and industrial diesel, with diesel identified as the fuel category generating the heaviest losses.However, even this intervention will not fully cover the losses incurred by the CPC.
Speaking to the media on Thursday (1), CPC Chairman D.J.A.S. De S. Rajakaruna said that the estimated cost of auto diesel stood at Rs. 528 per litre, compared with the revised retail price of Rs. 392 – a gap of Rs. 136.With the Government absorbing Rs. 70 of that gap through the subsidy, the CPC would still have to bear approximately Rs. 66 per litre.Aponsu acknowledged that the subsidy would not eliminate the corporation’s overall losses.“It will still have some losses from other fuel types,” he said. “That is why we increased the prices of 92 octane petrol, diesel, and super diesel. That is the share of the general public or consumers.”
Fuel prices were revised with effect from midnight Wednesday (30 September), increasing auto diesel to Rs. 392 per litre, super diesel to Rs. 528, and 92 octane petrol to Rs. 414. Meanwhile, 95 octane petrol and kerosene remained unchanged at Rs. 475 and Rs. 285 per litre, respectively.According to figures cited by the CPC Chairman, 92 octane petrol and super diesel are also being sold at prices that leave the corporation bearing part of their costs.The Energy Ministry is yet to determine how much the CPC and other suppliers will ultimately lose during the three-month period, with Aponsu saying the calculation depends partly on when individual companies had purchased their existing stocks.“The different organizations use the fuel they purchased at different times. When they use up their stocks, it involves a complex calculation,” he said.Aponsu further noted that private suppliers – Lanka IOC, Sinopec, and RM Parks – had higher landed costs than the CPC and would therefore also continue to absorb losses despite the Government subsidy.
Meanwhile, former MP Patali Champika Ranawaka has disputed the CPC’s cost calculations, publishing a comparison on social media based on Free on Board (FOB) prices at the Port of Singapore and an exchange rate of $ 1 to Rs. 330.According to Ranawaka’s calculations, 92 octane petrol costs Rs. 292 per litre at the cited import price level compared with the local retail price of Rs. 414, while 95 octane petrol costs Rs. 305 compared with Rs. 475 locally. He placed auto diesel at Rs. 350 compared with the local Rs. 392 and super diesel at Rs. 367 compared with Rs. 528.He also called for an explanation regarding what he described as substantial profits from furnace oil supplied to the Ceylon Electricity Board at Rs. 210 per litre.
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