Oil crisis: Frugality a priority

President urges public to reduce petroleum consumption:

COLOMBO: President Mahinda Rajapaksa yesterday appealed to the public to be frugal in consuming petroleum to the greatest possible extent to face the current global oil crisis.

Addressing media heads and senior media personnel at Temple Trees yesterday, President Rajapaksa said the Government was planning several measures in this regard which will be announced soon.

The President said a minimum 25 per cent reduction in petroleum consumption would be desirable as Sri Lanka will have to spend US$ 4 billion a year on petroleum imports if present consumption trends continue. This will be an addition US$ 1.6 billion over the current spending.

Ceylon Petroleum Corporation (CPC) Chairman Asantha de Mel said an increase in petroleum prices was inevitable given the steep prices in crude oil and refined oil. It would have been economically disastrous to continue the same price levels, he said. A crude oil barrel recently shot up to US$ 135.

"We have to reduce consumption and by extension, oil imports. Otherwise there will be a major crisis."

De Mel explained that when prices were previously raised in January, a barrel of diesel cost only US$ 103. It has now gone past the US$ 174 mark. There is every possibility of further increases with China needing huge supplies of diesel in the wake of destruction of hydropower dams in the earthquake-hit zone. "We cannot refine the entire demand for oil locally as the Sapugaskanda refinery can only process 50,000 barrels per day.

A litre of diesel, of which we need 145 million litres a month, costs Rs.122 even before it is imported without adding freight and other costs.

We earlier lost Rs.63 per litre of diesel and even with a Rs.30 increase, there is still a Rs.33 loss," de Mel added. He said the loss on kerosene was Rs.68 per litre. These subsidies are covered to some extent through petrol sales amounting to 40 million litres a month.

The CPC makes a small profit from petrol sales. "We were losing Rs.170 million a day on fuel subsidies. Even with the new price revision, there will still be a substantial loss."

The refinery upgrade will take another three to four years and then it will be possible to process more crude oil locally, thus saving foreign exchange, he noted.

Transport Minister Dullas Alahapperuma said it was unfair that 28 per cent of the population with private vehicles get the lion's share of the petroleum subsidies, whereas 72 per cent use public transport.

He disclosed that among the planned measures to save fuel was the conversion of 300,000 three wheelers to run on Liquid Petroleum Gas and the introduction of the Park and Ride concept, initially from Katubedda, where commuters will be able to park their vehicles and use a comfortable shuttle service to Colombo.

The Government has also increased the subsidy granted to the public transport sector from Rs.30 per litre to Rs.50 per litre. This will be extended to the private bus sector as well. The train service will also be improved with the commissioning of 15 new power sets in August.

"Research has shown that Rs.40 billion worth of fuel is wasted during traffic jams per year. Our goal is to improve public transport so that this wastage can be eliminated," Minister Alahapperuma remarked.