CPC trade unions hail new fuel tax

By Gamini Warushamana

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CPC trade unions welcomed the new fuel tax enforced by the government while people are worried about the escalating fuel bill. The spokesman for the CPC Common Service Union said that a huge amount of money had gone to the LIOC coffers as profits.

Commenting on today’s market conditions Managing Director, LIOC A. Ramakrishnan said that the market has settled and everything is fine. The tax is a government decision and LIOC does not worry about it. At present we are in a no profit, no loss situation for both petrol and diesel, he said.

After increasing its diesel prices three times within a week LIOC now sells a litre of diesel at Rs. 130, Rs. 20 higher than the CPC.

In response to a question on its impact on the company’s market share, Ramakrishnan said that LIOC had to decide on whether to safeguard the company or the market share. The company will lose if we sell diesel at Rs. 110 per litre and we decided to safeguard the company, he said.

Meanwhile, CPC trade unions said that LIOC’s strategy was to earn a huge profit from selling petrol while terminating diesel sales. CPC Common Service Union spokesman D. J. Rajakaruna said that a litre of diesel costs Rs. 117 in May and the loss was Rs. 7 per litre. The cost would be around Rs. 127 per litre in June.

The CPC covered that loss with the Rs. 34 per litre profit it earns from petrol. Today, LIOC with a share of around 40% will have to depend on the profit from petrol. Motorists get diesel only from the CPC filling stations because the price difference is huge and as a result CPC’s loss in mounting.

The new tax on petrol is, therefore good. However, it should be reimbursed to the CPC to cover the loss we incur by selling diesel at a subsidised price.

According to a cabinet paper passed in 2006, the government has to subsidise the CPC when LIOC sells diesel at a higher price to the CPC, Rajakaruna said.