ECONOMYNEXT – Days after Sri Lanka’s Central Bank called for a price formula for petroleum, Energy Minister Udaya Gammanpila told parliament on Tuesday (23) that a formula must be adopted immediately in the event a stabilisation fund is not maintained.
Responding to a question in parliament, Gammanpila said it is the poor who will have to bear the burden if fuel prices in Sri Lanka are not revised to reflect world market prices.
“The super rich of this country own vehicles that do only 3 or 4 kilometres per litre. The weight of this is borne by the value added tax (VAT) paid by villagers in remote areas who might not have even seen such vehicles. This isn’t fair,” he said.
Gammanpila said a fuel price stabilisation fund that was originally proposed by him on March 15 has yet to receive cabinet approval.
“That’s what’s best suited for a country like Sri Lanka where fuel price impacts the cost of living and the cost of production.
“If that isn’t implemented, at least the price formula [as proposed by the Central Bank] must be adopted immediately,” he said.
The ruling Sri Lanka Podujana Peramuna (SLPP) while in opposition between 2015 and 2019 severely criticised a fuel pricing formula of the then administration and promised to fix prices.
In June this year, Gammanpila said the stabilisation fund, a key strategy of the current administration which rejected market pricing of fuel while in opposition, was “not there”.
Finance Ministry reports showed that the fund was set up in 2020 but contributions stopped as prices started to pick up and a tax surcharge on fuel was removed.
Deepening the mystery further, official data showed that the underlying account of the Fuel Price Stabilization Fund was in fact 26 billion rupees negative by end 2020.