CPC’s heavy losses rule out fuel price reduction 

Petroleum Industries Minister says:

By Maheesha Mudugamuwa-January 17, 2014,

In the wake of trade unions urging the government to reduce fuel prices instead of increasing fuel standards, Petroleum Industries Minister Anura Priyadarshana Yapa yesterday said that local fuel prices couldn’t be reduced as the Ceylon Petroleum Corporation (CPC) was still incurring heavy losses.

Minister Yapa told The Island that fuel prices in the international market had not gone down though some people were shouting about the need for price reductions.

"We have recently introduced 92 Octane petrol which is of high standard than the earlier used 90 Octane petrol, not to mislead the public but to provide them quality petrol at the price they spent earlier," he said.

"It’s much better upgrading fuel standards than reducing the prices," Yapa said.

"We had to bear the cost of converting the 90 Octane petrol to 92 Octane; however, we decided to bear that cost instead of burdening the general public. We made these changes on the basis that we will not increase prices of fuel in the near future," he stressed.

The minister explained that the Octane rating or Octane number was a standard measure of the performance of a motor fuel.

‘The higher the Octane number, the more compression the fuel could withstand before detonating, he said adding that the use of gasoline with lower Octane numbers might lead to the problem of engine knocking.

According to the minister the next objective of the government is to introduce high standard diesel to the market.

"We can’t reduce the fuel prices because we have not yet come down from the losses incurred by the CPC through the fuel subsidies," Yapa said.

But the minister recently said at a media briefing that the CPC had not experienced any losses last year, adding that Ceypetco was able to achieve this feat even after paying a sum of 60 million US dollars or 7800 million rupees on the hedging agreement.

He said Ceypetco suffered an operational loss of Rs.61.2 billion in 2012 due to the hedging agreement signed with a bank.

However, petroleum industry trade unions claimed that Minister Yapa had misled the public by introducing bogus 92 Octane petrol to the market.

They said that the majority of the country’s population belonged to the working class and many of them were poor, so they want a fuel price reduction not an increase in fuel standards, as the prices of all goods depend on fuel prices.