According to the current fuel prices in the world market, the fuel price reduction done last night is not enough, says Janaka Ratnayake, Chairman of the Public Utilities Commission.
He points out that fuel prices, which are not based on reasonable costs, have heavily affected electricity tariffs.
Therefore, the chairman said in a statement that the method of determining the fuel price should be implemented so that people can know the fair cost.
He has indicated in the announcement that there is a possibility of further reduction in fuel prices. The relevant announcement is given below.
A proposal from the Public Utilities Commission of Sri Lanka to implement a transparent price formula as the Ceylon Electricity Board has to incur unnecessary expenses for the generation of electricity due to the lack of a proper fuel price formula.
Sri Lanka Public Utilities Commission Chairman Mr. Janaka Ratnayake emphasized that the method of determining the fuel price should be implemented in such a way that the people can know the fair cost. Mr. Ratnayake states that he has also submitted information to the COPE Committee of the Parliament in this regard. The price of a liter of fuel in Sri Lanka should further decrease in accordance with the actual prices in the world market. Mr. Janaka Ratnayake said that it is clear from a newspaper report published yesterday that the Ministry of Finance has also confirmed that the data he presented earlier regarding the actual fuel prices is correct.
“The price of petrol was reduced by Rs. 20 last night. I had pointed out two weeks ago that the price of a liter of petrol and diesel can be reduced by Rs. 150. These facts were revealed based on the actual prices of fuel imported into Sri Lanka according to customs data. The authorities of the petroleum sector have not yet revealed what these true prices are. There should be a transparent system to determine the fuel price which strongly affects the country’s economy. According to current world market prices, last night’s reduction of prices is not enough. Another newspaper report published yesterday has further confirmed the data I presented regarding fuel prices. According to the current market data and the actual prices paid by the Ceylon Petroleum Corporation for fuel import, the local price of a liter of fuel can be reduced by at least Rs. 100. Fuel prices should be determined in a simple way that anyone can know based on reasonable costs. Also, the fuel price formula based on a proper time frame should be implemented in such a way that market irregularities do not occur. “The fuel price should not be decided on the basis of other objectives without a proper time frame.”
Sri Lanka Public Utilities Commission Chairman Mr. Janaka Rathnayake points out that fuel prices that are not based on reasonable costs have severely affected electricity tariffs.
“Electricity tariffs are determined based on a transparent methodology based on reasonable costs. All the costs from generation to the distribution of electricity are made known to all parties including the electricity consumers as well as the public. Currently, 35% contribution is made from fuel plants for electricity generation. These power plants use all 3 types of fuel namely diesel, kerosene, and naphtha. For continuous electricity supply, about 3250 metric tons of fuel are spent daily to generate electricity. While determining electricity charges, we need to know whether we are paying a fair price for fuel. At present, a liter of diesel fuel is supplied to these power plants for Rs. 419. But if calculated according to the customs data, the fair price per liter should be Rs.191. Accordingly, the power plants are charged an extra Rs. 228 for every liter. Due to this, an additional burden of Rs. 270 billion is imposed on electricity consumers annually. If fuel is supplied for power generation at fair prices, the impact of the proposed power tariff revision can be minimized.”
Currently, there is a downward trend in crude oil prices in the world market. In order to take advantage of this, crude oil can be continuously supplied to the country’s refineries and all fuel types required for electricity generation can be provided at the lowest prices. A price formula and price regulation with a transparent and scientific basis, such as the current price system for electricity, should be implemented immediately for fuel. Chairman of Ceylon Public Utilities Commission Mr. Janaka Ratnayake emphasized.
The Sri Lanka Electricity Act has assigned full legal powers to the Sri Lanka Public Utilities Commission to regulate the electricity industry. The commission was appointed to regulate the petroleum industry in 2006. But the laws related to the petroleum industry, which legally transfer the regulatory powers, have not yet been passed by the Parliament. Therefore, the commission or any other regulatory body has no legal powers to intervene in the regulation of petroleum oil. I suggest that the responsibility of petroleum regulation be handed over to the Public Utilities Commission of Sri Lanka as soon as possible. Then a transparent system for fuel prices can be implemented. Then the goals such as fuel price regulation, efficient distribution, high service level, and quality can be achieved. This type of regulatory mechanism can ensure price stability in the power and transportation sector by providing fuel to the petroleum consumer as well as the power sector at fair prices.
