Fuel price formula likely; CPC owes Rs.720bn to BoC, People’s Bank

COLOMBO: The Ceylon Petroleum Corporation (CPC) will propose to the government to usher in a Fuel Price Formula (FPF) soon in the wake of the debt of US$ 3.6 Billion (Rs.720 billion) that the CPC owes the Bank of Ceylon (BOC) and the People’s Bank.

It is impossible to continue in this manner with successive governments absorbing the losses of the CPC and I will recommend to the Cabinet to bring in a FPF in the near future, Energy Minister Udaya Gammanpila told the Daily News yesterday.

“This will create an atmosphere where we can increase the prices when the global prices are up while we can reduce the prices when the prices are down. The absence of a price reflective mechanism was the cause of the CPC’s woes,” Minister Gammanpila said.

Successive governments have not implemented a cost effective pricing mechanism and this is the debt which has accumulated over the last 20 years, the minister said.

Responding to a question on how the CPC proposes to restructure these debts, the minister said the government was dealing with foreign banks and other overseas institutions to borrow at interest rates lower than the rates it is paying the BOC and the People’s Bank.

“The problem we are faced with is that fuel prices are going up and poised to go up even further. We don’t have adequate Natural Gas or oil. We also have a US Dollar crisis as well”.