Chevron's price increase inevitable - MD/CEO

Ravi Ladduwahetty

The decision of Chevron Lubricants Lanka PLC (formerly Caltex) to increase prices by 20% for all its products effective Monday was inevitable, Managing Director/CEO Kishu Gomes told Daily News Business yesterday.

Gomes attributed the 20% increase, effective 48 hours ago, over the 10% increase in 2007 was due to the sharp increase in the crude oil prices to US$ 135 per barrel from the US$ 65- 70 per barrel in 2007 where there was only a 10% increase.

He attributed the other reasons for the increase due to the corresponding rises in the principal raw material- Base Oil which has risen to US$ 1300 per ton from US$ 700, the price rises in the steel drums and also plastics which went into the raw material processing as an additive.

The higher costs of transport due to the galloping fuel prices was also another factor for the price increase. However, he noted his multinational corporate making centralised purchases from Continental, Gulf and South East Asian markets such as Singapore and Hong Kong had the advantage of economies of scale.

The company in a prudent move had also increased its prices to its two principal export markets - Bangladesh and Maldives, which had to some degree cushioned the deleterious impacts of the rising lubricants prices in the local market.

One of the further drawbacks to the company's bottom line was also the recent increase of the staff salaries and emoluments in line with the present inflationary trends now running at almost 30 per cent.

However, he said, that there is a consolation that we increased the prices only by 20 per cent in sharp contrast to fuel, liquid petroleum gas and other commodities which had much sharper increases.