Export Formula

Dec 09, 2008 (LBO) – Sri Lankan industrial exporters say the lack of a transparent price formula especially for diesel has increased their production cost against foreign competitors, especially at a time when the rupee is also overvalued.

In Sri Lanka petroleum pricing has become heavily politicized since 2004, after the Janatha Vimukthi Peramuna, a Marxist-nationalist party pushed the government to scrap the formula saying it is a World Bank plug.

Whims and Fancies

Now politicians decide the price of fuel.

“Being an exporter it’s easy for us to have a formula pricing mechanism that’s transparent and not according to the whims and fancies of someone who decides not to reduce that and reduce something else,” Sunil Wijesinha, chairman of Dankotuwa Porcelain, a unit of Japan’s International Ceramics Inc told a business forum this week.

The previous Friday Sri Lanka reduced petrol prices by 20 rupees to 122 rupees a litre and furnace oil by 10 rupees.

The price of diesel, set at 80 rupees a litre was unchanged.

There had been public outrage at the exorbitant prices set by the state on petrol, which is used by the poorer people such as motorcyclist as against diesel which is used by business and pol