Subsidies to cushion impact on rising prices

The increasing fuel prices have affected not only consumers but also industrialists and manufacturers. With sharp increases in world crude oil prices, the Government has no option but to reluctantly increase fuel prices.

According to Minister A. H. M. Fowzie, the Government has been compelled to adjust local fuel prices to match the fluctuations in world markets. The Government has been obliged to scrap subsidies given to the Ceylon Petroleum Corporation (CPC).

Of Sri Lanka's total oil imports, 50 per cent is utilised to generate electricity. This has increased by 10% as our hydropower contribution to the National Grid has not increased to meet the rising demand.

In any case the Government wants to protect the poor electricity consumers. Hence, exactly half of our total oil imports are given to the Ceylon Electricity Board (CEB) at subsidised rates. Accordingly, the Government spends millions of rupees on fuel for the CEB to generate power.

Moreover, the CEB helps the poor village electricity consumers who comparatively use less units. The Government has protected them from every CEB price hike.

The Government has assured that electricity and water rates would not be increased. In a country where only two per cent pay income tax, it is extremely difficult to provide everything at subsidised rates.

If all Sri Lankans are loyal and patriotic and fulfil their social obligations, the Government would have collected billions of rupees as income tax. A huge percentage of prospective income taxpayers are evading taxes through various loopholes and the Inland Revenue Department is making every endeavour to net them. Thereby, the Government would be in a position to utilise those monies on social welfare.

The Government is making every effort to grant subsidies for low income earners who deserve such relief. This is why the government is keeping the price increases of diesel and kerosene to the barest minimum, though the price of petrol has increased sharply in recent months. Petrol consumption is only one-fourth of Sri Lanka's total diesel demand.

Here too, the government has granted special relief to fishermen and negotiations are under way to provide the same relief to three-wheel owners and private omnibus operators. Minister Fowzie says he is ready to grant immediate relief to three-wheel owners, provided they implement the long-awaited taxi meter system.

This is a must to pass on the benefits of such a subsidy to commuters or else the expenses incurred by the government on such subsidies would only fill the pockets of three-wheel owners.

Similarly, private bus owners too should give an assurance that they would not seek fare hikes each and every time the price of diesel goes up by a few rupees.

Despite waging a war against the most ruthless terrorist organisation in the world and rocketing crude oil prices, the Government has not trimmed its huge contributions to sectors such as health and education, which are free. The Government continues to fulfil its commitment to the poor under the Samurdhi scheme and also subsidises fertiliser.

It is not an easy task for any Government to provide subsidies to each and every sector. Nevertheless, President Mahinda Rajapaksa and his government is making every endeavour to minimise the burden on the common man.

All countries, which do not produce petroleum products, are adversely affected by the rising crude oil prices. A developing country such as Sri Lanka feels it the most. Hence, we must look into other ways and means to generate power.

The Norochcholai Coal Power plant and proposed oil exploration in the North and East could be a big relief at this hour. The Government is going ahead with the two projects with more vigour.

Increasing the capacity of the Kolonnawa Oil Refinery is another way to reduce the cost of production. At present, it could only refine around 50% of the country's total requirements. As a result, the CPC is compelled to import by-products such as diesel at higher rates. Minister Fowzie too has proposed to reduce the costs by increasing the capacity of the refinery, which too would cost millions of rupees.

It is the duty of all and sundry to save energy and help the country reduce the ever increasing demand for petroleum products.

There is no magic wand to overcome the global energy crisis. The need of the hour is to look for alternatives and other energy sources to meet the challenge.