ECONOMYNEXT – Sri Lanka’s state-run Ceylon Petroleum Corporation has lost 83 billion rupees in 2021, and is running a 551 million rupee a day loss in February 2022 amid rising global oil prices and domestic taxes, Petroleum Minister Udaya Gammanpila said.
The CPC was now making a loss 551 million rupees a day, Minister Gammanpila said on February 18.
CPC had lost 83 billion rupees last year.
The CPC was making loss of 19 rupees on a litre of Petrol Octane 92 after taxes and 17 rupees on Petrol Octane 95.
The firm was losing 52 rupees from a litre of auto diesel and 35 rupees from super diesel.
On Kerosene it was losing 63 rupees.
Government taxes on Petrol 92 were 42 rupees a litre, on Petrol 95 64 rupees, diesel 17 rupees and super diesel 39 rupees.
Each day the CPC was paying 368 million rupees in taxes as the firm lost 551 million rupees.
The CPC had asked for a price hike or a tax cut as it cannot borrow any more.
“CPC can’t borrow any more loans from banks,” Gammanpila said.
“We have already borrowed 3.71 billion dollars so far. We can’t borrow dollars anymore
Finance ministry has to decide how much tax should be reduced. So far they have not informed. Even if the tax is reduced, we will have to increase the prices.”
The CPC, which has no dollar revenues, is forced to borrow by Sri Lanka’s Mercantilist policy-makers every time the central bank prints money and creates forex shortages.
The CPC is then forced to borrow dollars and get hit by a massive forex loss when the currency eventually collapses.
“We have not decided to increase prices yet,” Gammanpila said. “Some fuel retailers have created shortage expecting that we are going to increase the prices. We will only inform the price revision only after 10 pm.”
Sri Lanka is now in the throes of yet another currency crisis and Sri Lanka is now getting a 500 million dollar credit line from India instead of tightening monetary policy. Inflation is also running at 14.2 percent in the year to January 2021.
Sri Lanka has also not gone to the IMF, which generally asks for monetary tightening and a float of the currency to stop sterilized intervention or printing money after giving reserves for imports.
Minister Gammanpila said he supported an IMF program and most of the cabinet was also in favour. (Colombo/Feb18/2022)