ECONOMYNEXT – Sri Lanka’s Power and Energy Ministry has raised the profit margin on the widely used petrol and diesel to 4 percent in the latest price revision after reducing them a month ago, official data showed.
President Ranil Wickremesinghe’s government reduced the price of widely used Octane 92 by three rupees to 368 and Lanka Auto diesel by 20 rupees to 333, the official data showed.
However, the government has raised the profit margin on Octane 92 and white diesel to 4 percent in its latest price revision.
An estimation with the reduced profit margin show the government could have further reduced the price of Octane 92 by at least 7 rupees and Lanka Auto diesel by another 2 rupees.
The profit margin for Octane 92 was reduced to 1.5 percent in the previous month revision for April prices while for Lanka Auto diesel, it was slashed to 3 percent.
D V Chanaka, the State Minister for Power and Energy last week said the fuel price formula was changed and instead of 4% fixed profit margin, the government allowed flexibility for fuel retailers to chose their profit margin from 0-4 percent.
He said the government reduced the profit margin to maintain the prices of Octane 92 and Lanka Auto diesel.
Private fuel retailers Lanka Indian Oil Corporation (LIOC) and Sinopec also have followed the prices fixed by the government.
Maintaining stable fuel prices is considered as a gauge to measure a ruling government’s achievement and failure to maintain the prices at lower level had led to government change in the past.
Successive governments in Sri Lanka have mostly sold fuel at a subsidized price by absorbing the losses to petroleum companies due to fear of becoming unpopulour among the voters and losing elections.
The government’s move to reduce the profit margin last month and reduce the prices of fuel despite an increase in the profit margin come ahead of a presidential poll later this year in which President Wickremesinghe is expected to contest under an independent coalition. (Colombo/May 1/2024)