July 16, 2007 (LBO) – Sri Lanka will adjust fuel prices monthly on a transparent formula to cut losses in petroleum utilities, an official said, which is expected to reduce exchange rate pressure and avoid the build-up of macro-economic imbalances. Ceylon Petroleum Corporation (CPC) Chairman Ashantha de Mel says a cabinet sub-committee on energy had agreed to monthly price adjustments, and the last price increase was made on that basis.
“The sub-committee agreement was that the price of fuel would be adjusted on a monthly basis,” de Mel said.
“Last month the price increased, and it will go on a formula.”
De Mel says the formula would be published in newspapers and price adjustments made at the beginning of every month.
“We want to put a press advertisement in all the papers and explain to the public how it works, so that everybody knows the formula,” he said.
“There is nothing for us to hide.”
Sri Lanka devised a monthly price formula as part of a strategy to bring the country out of a balance of payments crisis in 1999 and 2000, which was made worse by fuel subsidies. Fuel is the single largest imported commodity to the island.
In 2002 and 2003 economic stability was restored partly wi