CPC calls for diesel price hike

By Lalin Fernandopulle

The Ceylon Petroleum Corporation (CPC) has called upon the Minister of Petroleum Resources to increase the price of diesel by Rs. 3 per litre due to the surge in world crude oil prices.

When contacted CPC Chairman, Asantha de Mel said a price hike is inevitable due to the sudden increase in world oil prices and to narrow the margin of loss the CPC incurs in subsidising petroleum.

The CPC incurs a Rs. 650 million loss on diesel per month in meeting the country's consumption requirement which is over 135,000 litres. The loss per litre on diesel is Rs 5.

De Mel said the CPC is considering a Rs 2 price increase per litre on kerosene to curb losses and keep pace with the rising world oil prices. The CPC has to bear a loss of Rs. 250 million per month on kerosene. A litre of kerosene is sold at Rs. 43.

Consumers feel that it is unfair to increase the price of diesel as the price of petrol was increased last week which resulted in a taxi fare hike. The CPC increased the price of petrol by Rs. 7 per litre.

When asked why the CPC did not pass on the benefits to the consumer when world oil prices dropped last year, he said there were no adequate storage facilities and that it would cost US$ 2 million to build a tank.

The present storage capacity is only 35,000 tons, he said.

World crude oil prices shot up to US $ 68 per barrel last week due to the crisis in the Middle East worsening over Iran and the increase in consumption in the United States.

The increase in the price of diesel will affect consumers who cannot afford a square meal due to the staggering cost-of-living. The price hike will have a spiral effect on the prices of all consumer goods, he said.

Petroleum and Petroleum Resource Development Minister, A. H. M. Fowzie said if oil explorations under-way in the Mannar coastal belt is successful this year the burden of consumers will ease.

India and China have volunteered to carry out explorations in six identified locations in Mannar.