Amidst the recent hike in domestic fuel prices, Sri Lanka’s current retail prices are comparatively lower than many regional peers, a recent analysis by the Finance Ministry has showed. While Petrol and Diesel were revised in Sri Lanka with effect from September 10 Oetrol 2018 to Rs. 161 and Rs. 123 respectively, prices in India currently stand at Rs. 190 (Petrol) and Rs. 171 (Diesel), Bangladesh - Rs. 173 (Petrol) and Rs. 127 (Diesel) and Singapore - Rs. 267 (Petrol) and Rs. 208 (Diesel).
However, Sri Lanka’s current petrol price is comparatively expensive than Pakistan which retails at Rs. 122 although Diesel, sold at Rs. 142 is more costly in Pakistan than Sri Lanka.“For our misfortune ever since the fuel price formula was introduced the prices have only gone up.
There is strong criticism about this so we need to see if we need to continue with it or amend the formula,” President Maithripala Sirisena told newspaper editors and heads of media institutions at President’s House on Friday.According to historical prices published by the Ceylon Petroleum Corporation (CPC), prices of Petrol 92 remained at a historical high of Rs. 170 during the period from 23rd February, 2013 to 17th September 2014 following the upward revision to Rs. 167 in February 2012.
Sri Lanka’s fuel pricing mechanism takes into account the variations of Brent crude oil prices of the Singapore Platts Price per barrel (including premium) and the prevailing exchange rate against the US Dollar. According to informed sources, other factors used in the determination of prices are distribution costs and percentage of taxes on fuel.
The taxation structure applicable on petroleum is publicly available in the Annual Report of the Ministry of Finance and Mass Media
“The pricing formulae is a simple mathematical calculation derived from adding the landing cost of fuel (determined by external factors such as the average of Singapore Platts plus weighted average of premium charges during the revision period and conversion factor of monthly average of exchange rate during revision perioad), operating costs and taxation,” a senior official attached to the Department of Fiscal Policy at the Finance Ministry said.
The daily adjustment of fuel prices known as the ‘dynamic fuel pricing model’ is presently being followed in several countries in Asia including India and Singapore, Europe, Australia and the US, where prices change depending on the hour of the day and even in a particular area based on demand
Amidst the heavy fluctuation in world oil prices, India, has adopted a ‘daily petrol price revision system’ since June 2017 moving from a fortnightly basis wherein changes in costs are now reflected daily at 6 a.m.