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| Saturday, 31 July 2004 |
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Accumulated fuel subsidy tops Rs. 6b World Petroleum prices have been continuously increasing since last December 2003. The retail prices of all petroleum products (petrol, diesel, kerosene, furnace oils) are being revised on monthly basis according to the previous month world oil prices and the average exchange rate, through an approved" monthly price adjustment formula by the CPC (including LIOC). The implementation is finally decided by the Treasury, failing which the Treasury is liable to pay the CPC/LIOC the subsidy claims within three months, as per the agreements. Petrol prices were last revised in February 2004 from Rs. 55 to Rs. 57 per liter. Diesel, kerosene, furnace oils were not revised since last December 2003 by the Treasury, although the monthly revisions have been made according to the above formula. The current price of 90 Octane Petrol for July 2004 should be Rs. 66 per liter (revised price from Rs. 57 to Rs. 65, by Rs. 8). The current price of 95 Octane Petrol for July 2004 should be Rs. 69 per liter. (revised price from Rs. 60 to Rs. 68, by Rs. 8). The current price of Auto Disel for July 2004 should be Rs. 42.50 per liter (current selling price Rs. 32). The current price of Kerosene for July 2004 should be Rs. 35.60 per liter (current selling price Rs. 25.50). The accumulated subsidy claim for CPC Treasury is about Rs. 6 billion up to July 2004. The subsidy claim for July 2004 alone is about Rs. 1.70 Billion. Saving on subsidy for July 2004 is only Rs. 240 million (out of Rs. 1.70 billion) by the increase in the Petrol price by Rs. 8.00 per liter. The Treasury has not increased the prices of diesel and kerosene as that affects all the other essential commodities to the public including public transport. Increase in petrol prices has the least social impact. The unpaid subsidy (Rs. 6 billion) from the Treasury affects the cash flow of CPC. The Treasury has to consider early payment of the outstanding subsidy claims, in order to keep the Diesel and Kerosene price at the current levels without increasing in the next few weeks. |
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