No immediate fuel hike, assures Fowzie

Rafik Jalaldeen

There will be no immediate increase in the local oil prices notwithstanding the steep rise in the crude oil prices in the world market, Petroleum and Petroleum Resources Development Minister A. H. M. Fowzie said.

Addressing the media yesterday, the Minister assured that the increase in the oil price in the world market will not impact locally.

“When oil prices go up in the world market we don’t automatically increase the prices in the local market, just like when the price goes down in the world market we don’t decrease it here . We follow this procedure to safeguard the consumer through the subsidy,” he said.

Oil prices have increased to US $ 110 in the world market but the Government has not increased oil prices since January 2008 even though the Ceylon Petroleum Corporation (CPC) loses over Rs.1,135 million each month.

“Even though oil prices had gone up in the world market, we did not increase the price in the local market since January and the CPC lost Rs.1,135 million per month and the total losses reached Rs.3,900 million during the last three months,” Minister Fowzie said.

The Minister asserted that losses from diesel and kerosine was recovered by petrol.

Consumers had been provided subsidies indirectly. The local oil prices after increases in January 2008 were as follows - a litre of Kerosine was sold for Rs.70 instead of Rs.85.50 with a loss of Rs.15.50, a litre of Diesel was sold for Rs.80 instead of Rs.91.47 with a loss of Rs.11.47 and a litre of Petrol for Rs.127 instead of Rs.108.45 benefiting by Rs.18.55.

“We also introduced subsidies to consumers to benefit indirectly and balance the losses. The CPC had gained Rs.500 million by hedging and Rs.600 million from refineries. We are also planning to double the oil refineries to patch up the losses to gain Rs.2,000 million per month,” he added.

Minister Fowzie reiterated that oil prices will not be announced before April 2008 and until the next oil stock had arrived .

“We have to wait for the new stock to arrive in April by the Sinhala New Year and only then we can announce the average oil price considering the current situation. This price can be less than the current oil price or more,” the Minister said.

Responding to a question on LP gas production, CPC Chairman Ashantha de Mel said all measures had been taken to produce and introduce LP gas in the local market, and for infrastructure and other requirements bowsers and material to produce LP gas Rs. 250 million was needed.

“We are planning to supply 40 per cent of the LP gas to the local market which will be sold Rs.150 less than the current market price of gas. We have 10,000 cylinders and will require another 40,000 cylinders within the next two months and to produce 40 per cent of the gas demand of the local market 1.2 million cylinders will be required,” he added.

Minister Fowzie said demands and salary increases by the Unions were unfair and untimely.

“When I took office I increased CPC employees, salaries by 23 per cent and now they are demanding for more comparing them with the Ceylon Electricity Board. It is not fair because salary increments will be considered every three years and the next salary increment is due in 2009.I have appointed a committee to oversee the matter”.

He said it is unfair to draw a parallel with the CEB since the latter offers only a one month bonus per year but the CPC offers two months bonus per year plus medical insurance and other benefits.

“What they are doing is trying to put the Government in difficulty by sending the CPC employees to the street,” he remarked.