ECONOMYNET – Sri Lanka’s state-run Ceylon Petroleum Corporation, a key trigger of economic instability in the country, has lost 68 billion rupees in the nine months to September 2017, amid mis-pricing of fuel, officials said.

CPC is now losing 11 rupees on a litre of petrol, 7 rupees on a litre of diesel and 25 rupees from kerosene, after paying turnover taxes.

Sri Lanka’s government has still not made a decision on implementing a price formula, Petroleum Minister Arjuna Ranatunga said.

“The decision on pricing formula has to be taken by the government,” Ranatunga told reporters. “Unfortunate thing is if we try to get a formula done, it will affect the masses,” he claimed.

“In the future there can be a change. But at the moment we are not looking at it. I do not think it is the best time to do it, since the cost of living has gone up.”

Energy however is used less by the poor, and mostly by the rich. Economists say 70 percent of the fuel sold in the country are consumed by the upper 30 percent of income earners in society, an economist said last week.

The consumption of either petrol, diesel or electricity goes up with income.

Central Bank Governor Indrajit Coomaraswamy said off-budget subsidies given by CPC and CEB has been a problem.

Losses of the CPC or Ceylon Electricity Board or both has also triggered balance of payments crises in the past when they were accommodated by central bank credit, when interest rates were not allowed to go up, with the rupee collapsing, pushing inflation up and hurting the poor most.

Later taxes collected from foods of the common people including from hospital bills, are used by the Treasury to subsidize CPC and CEB, whose customers included exporters who sell goods in countries with higher income levels.

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