May 11, 2015 (LBO) – Sri Lanka’s subsidized energy sector will be introducing a regulated pricing formula for fuel prices soon, the Minister of Power and Energy Ministry said.
“We are planning on introducing a fuel pricing formula linked to electricity tariffs or one that would change prices every three months based on global prices in the near future,” Power Minister Patali Champika Ranawaka said.
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“A link with the fuel pricing formula to electricity tariffs is being proposed because 10-12 percent of electricity is generated through fuel, especially power plants using heavy fuel oil,”
“At present the electricity tariffs are revised twice a year that is in April and October,”
The Minister also said there is a second proposal to revise fuel prices every three months after evaluating world prices.
However he said although we will have a transparent fuel pricing formula it will not be like India’s open liberalized energy market but will be a regulated.
“If we do this it may affect our industries and domestic consumers,” the Minister said.
“In Sri Lanka we’ll have a regulated, state-run type of system to protect the poor and low consumption consumers,”
Meanwhile, the Minister said there will be no price hike in fuel, shortage in the country or privatization of the CPC and requests people not to be misled by false propaganda.
Oil mafia earlier spread a false statement saying oil prices will be increased shortly and now they are pretending an oil shortage in the country, the minister said.
“They are trying to discredit the concessions provided by the new government. 80 billion worth of fuel subsidies was given to people of this country since January 2015 after the President came to power under his 100 day programme,”
“We have been able to stimulate the economy in the past three months due to this and a family on average has been able to save 15,000 rupees a month.”
The Minister also said that the CPC has made a profit in the past three months.
“Since January 1 up to March 31 we have a surplus of 17 billion rupees as pre tax profit of CPC and we are determined not to make a loss,”
Sri Lanka’s state run energy utilities typically trigger balance of payments crises and inflation in Sri Lanka by selling imported energy below cost and financing the gap with bank credit which are ultimately accommodated by central bank credit (printed money).