Burning Loss

K G P Sirikumara, Director, Legal and Compliance Department, Central Bank handing over the report to Prof. W D Lakshman

Mar 03, 2012 (LBO) – Giving subsidized furnace oil to a state-run power utility was the main main source of losses at a petroleum utility, while the private firms also made higher profits due to cheap power, the finance ministry said. The finance ministry said state-run Ceylon Petroleum Corporation lost 90 billion rupees in 2011 mainly due to selling furnace oil to the Ceylon Electricity Board at 40 rupees a liter when its cost was around 110 to 116 a litre.

“Thus, it seems that the majority of the loss of the Petroleum Corporation has occurred mainly due to the Electricity Board,” a finance ministry statement said.

“The private sector could raise their profit volumes because they buy fuel at concessionary prices.

“The general public of the country also could enjoy a low inflation rate as the Petroleum Corporation was supplying fuel at concessionary prices while incurring losses.”

Sri Lanka raised fuel prices steeply and slapped a surcharge on power tariffs after credit taken by state enterprises contributed to pressure on a dollar peg, with the rupee falling from 109 to 120 rupees so far.

CPC sells petrol at a large profit with the Treasury also charging a 25 rupee excise tax in addition to port and airport