Caution Ahead

As oil threatens to hurtle past US$ 70 a barrel, state oil giant Ceypetco is urging the government to raise prices, with its oil bill likely to shoot past US$ 1.4 billion this year. As oil threatens to hurtle past US$ 70 a barrel, state oil giant Ceypetco is urging the government to raise prices, with its oil bill likely to shoot past US$ 1.4 billion this year. Sri Lanka is still holding retail prices steady, as fears mount of reduced growth, soaring inflation and a widening deficit to foot an astronomical fuel bill.

Diesel should be selling at Rs. 56.50, currently sold at Rs. 50.00 a litre while kerosene is being subsidised by over Rs. 20.00, selling at Rs. 30.50 a litre at fuel sheds.

Petrol, currently selling at Rs. 80.00 has to sell at Rs. 88.00 a litre. Just a few weeks ago, the government gave up Rs. 7 billion in tax revenues to scrap the Value Added Tax component on diesel to avoid the price increase in July.

“Keeping diesel prices at current levels is the best thing for the moment to keep the cost of living down. Because any price changes have a knock on effect on transport and food prices,” Finance Minister Sarath Amunugama said at the time.

“Given the po