Tax on petrol hardly sufficient to cover diesel subsidy - CPC

The Ceylon Petroleum Corporation (CPC) in a press release issued yesterday, said the tax on petrol helped to offset the loss incurred by the sale of diesel at a subsidised rate to a certain extent.

Levying of a tax on imported fuel had been a procedure customarily followed throughout history and the UNP government too imposed a tax of over Rs 25 per litre fuel during its tenure, the CPC said. The release added: "The landing cost of a litre of diesel is Rs 112 but it is sold to consumers at Rs 84 incurring a loss of Rs 28 per litre.

Diesel consumed in the country is double the amount of petrol used and when taking the amount of diesel used for electricity generation is taken into account, it is almost treble that of petrol. The statement said the IOC which is not subjected to a tax on fuel had never sold fuel at a cost lower than that of the CPC either. Before the CPC increased fuel prices, the IOC sold a litre of diesel at Rs 6 more per litre than the cost of CPC diesel.

Still, the cost of fuel in Sri Lanka is much lower when compared to prices in several countries including India. Even though fuel prices increased in the world market during the past six months, the CPC did not effect a corresponding increase in prices and it was forced to suffer an enormous loss as a result.