Home News More distractions as a fuel price crisis looms

More distractions as a fuel price crisis looms

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More distractions as a fuel price crisis looms
The government is attempting to distract the public from the ongoing fuel price crisis, political commentators allege.

A spike in crude prices

Minister of Energy Udaya Gammanpila said at a recent media briefing that the price of fuel in Sri Lanka could fluctuate depending on the price of a barrel of crude oil in the international market and the exchange rate in Sri Lanka.
Meanwhile, the Presidential Media Unit said in a statement that the continuous rise in world crude oil prices in the past few months was one of the reasons for the increase in fuel prices. It said that the price of a barrel of crude oil has now exceeded $70.

What happened when crude oil was less than $10 in the international market? 

Although the government took steps to increase the price of fuel in Sri Lanka at this time when the price of crude oil rose to $70 per barrel, while in opposition they promised to reduce the price of oil. But after coming to power, the price of a barrel of crude oil fell upto $10 per barrel in 2020, but they did not take action to provide that relief to the people.

More lies from the Presidential Media Unit?

According to the Presidential Media Unit, the price of a barrel of crude oil fell down to $ 45.57 in 2020. But in April 2020, the price of a barrel of crude oil in the international market dropped nearly up to $ 10 per barrel.
Also, for the first time in history, the price of a barrel of crude oil in the US market showed a negative value in April 2020. That’s because the corona epidemic had reduced demand for oil and reduced space for oil storage.

What happened to the price stabilization fund? 

The government leaders said that the people would be benefited with reduced prices of dhal and salmon. It said the profits from the fall in crude oil prices would be credited to the Price Stabilization Fund and the fuel prices would be controlled through the fund when world market prices spiked again. But no relief was received back then nor now. No clue of that Price Stabilization Fund also to be found.

The benefit robbed from the people?

The last time crude oil prices were high was on October 5th 2019. It was between $74-85. The price of a barrel of crude oil, which then fell to the level of $ 50-60 by 31st January 2020, remained lower for almost a year until the first week of February this year, at a rate less than $ 60. In some cases, it even reached the level of $10 per barrel. But at no time during that year did the people of this country receive the benefit of the fall in the crude oil prices.
World crude oil prices fell to $ 20 in March 2020, the early days of the Corona epidemic, and $ 15 in April. Until October last year, the price was between $ 30-40.

IOC Profits – CEYPETCO falls behind

Ceylon Indian Oil Corporation (Lanka IOC) had a revenue of Rs. 81.95 billion for the 2019/2020 budget year. However, the Minister of Energy stated that the loss of the Ceylon Petroleum Corporation at the end of 2020 alone was Rs. 331 billion.

Can unconfirmed statements be accepted? 

Speaking to the media, Energy Minister Gammanpila said that the money from the Price Stabilization Fund has been used to repay CEB loans. In a statement issued on the 13th, the Presidential Media Unit stated that the Ceylon Petroleum Corporation (CPC) is a depreciating institution and has become a dependent institution of the Bank of Ceylon and the People’s Bank and currently owes Rs. 652 billion to these two state banks.

‘Numbers’ that cripple people 

According to the Presidential Media Unit, the foreign exchange spent on crude oil imports in 2019 was US $ 3,677 million and $ 2,325 million in 2020.
Although the ban on importing vehicles is continued on the fact that the price of a crude oil barrel exceeds $ 70 in 2021, the foreign exchange for petroleum imports will be around US $ 4,000 million and that thus expenditure is close to 1/3 of the total export earnings, according to the Presidential Media Unit.

Comparing Sri Lanka with America

Speaking to the media, Minister of State for Finance, Ajith Nivard Cabraal said that fuel prices in the United States are also higher than in Sri Lanka. But what he did not mention is that per capita income is an important factor in making such economic comparisons between different countries. Per capita income in the United States is much higher than in Sri Lanka. In Sri Lanka, that figure is less than  $4,000. The per capita income in the United States is about $ 65,000.
Meanwhile, two new contracts for the importation of diesel and crude oil were approved by the Cabinet on the 14th.
Announcement by the Government Information Department on New Contracts 
Awarding of long-term Contract to import Murban Crude Oil
Bids have been called for the suppliers Registered with Ceylon Petroleum Corporation for Long Term Contract to Import 1,137,500 Diesel Barrels (Maximum Sulfur Percentage 0.05) and 262,500 Diesel Barrel (Maximum Sulfur Percentage 0.001) for a period of 08 months from 1st June 2021 to 31st January 2022.
Accordingly, as per the recommendation of the Special Standing Committee on Procurement appointed by the Cabinet, the relevant contract will be awarded to M / s Petrochina International (Singapore) Pte. The proposal made by Hon. The Minister of Energy, to proceed with the related activities, was approved by the Cabinet.

 

More questions and no answers

Why was the concession not given to the people in March and April 2020, when the price of a barrel of crude oil fell to close to $ 10, nearly a fall of $60?
 What happened to the Price Stabilization Fund, which was set up to credit profits from the fall in crude oil prices?
Who is to be held responsible for this?
What is the reason for the Ceylon Petroleum Corporation to incur such losses?
Although MediaLK tried to contact Energy Minister Gammanpila to find out the answers to these questions, it was unsuccessful.

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