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| Sunday, 10 October 2004 |
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| News Business Features Editorial
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CEYPETCO oil prices to climb again? by Ranga Jayasuriya Hit by the soaring global oil prices, the Ceylon Petroleum Corporation has paid 39-40 dollars for a barrel of crude oil for its September and October consignment, in contrast to 29 dollars for a barrel in December last year. This is on the increase of nearly 35 per cent. Ceypetco Deputy Manager Planning and development Ranjith Wickremesinghe said the local oil price increases had been fuelled by the global increase, adding that his corporation was recommending price adjustments based on a revised formula which had been in place since February 2002. "Global oil prices have been increased dramatically since the late last year. In December a barrel of crude oil was 29 dollars. April it was 32. In September and October it was 39 and 40," he said. Wickremesinghe said Sri Lanka was purchasing crude oil from Iran, Malaysia and Saudi Arabia at a subsidised prices, which were approximately ten dollars lower than the US and UK prices. Iran accounts for 70 percent of Sri Lanka's oil imports followed by Malaysia (20%) and Saudi Arabia (10%). He said the Ceypetco every month make recommendations based on a monthly price revision formula to the Treasury on adjusting oil prices according to the global prices. "This has been in place since February 2002 and was revised in April, 2004 after privatisation to add profit margins," he said. "This resulted in 3-4 rupees increase in a litre of Petrol or diesel" According to the price revision formula, the monthly calculated price is compared with the price of the previous price; if the calculated price is less than the retail price of the last month, the next month's price will be reduced.If the price is more than the last month's price, the price of the next month will be increased. The price revision is done in 25 cents blocks with a maximum of 2 rupees per month. Wickremesinghe said his corporation was recommending monthly revisions in the backdrop of the recent increases in the global prices. He said diesel prices had to be further increased by Rs. 6.50 in order to match the prices recommended by the CPC. Both UNP and UPFA governments did not heed our recommendations on price adjustments." "Instead, they suddenly increase prices by higher margins in order to catch up the losses incurred due to not implementing our recommendations," he said when asked about the recent increases in petrol and diesel prices by high margins. |
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