Sri Lanka IOC raises petrol price again
Dec 24, 2008 (LBO) - The Sri Lanka unit of the Indian Oil Corporation, which slashed petrol prices in response to a Supreme Court order, raised the retail back to the earlier level of 122 rupees Wednesday.
The administration of president Mahinda Rajapaksa has not cut taxes as directed in the court order so far, and state-run Ceylon Petroleum Corporation, has also kept its retail price unchanged.

Sri Lanka`s cabinet of ministers had met several times over the issue, but has so far not changed taxes as directed in the court order, in a stand-off between the executive and the judiciary, that analysts say could move towards a constitutional crisis.

Meanwhile Lanka IOC chief Suresh Kumar said his company had cut the price under a court order, but when a new consignment of petrol was brought to the country on Wednesday, the same taxes were charged, forcing him to raise prices.

He said it was `not correct` to say that the government had put pressure to raise prices.

Court ordered petrol prices slashed following a public interest petition filed by an opposition lawmaker, a Buddhist monk and an anti-corruption activist.

The petitioners said the government was charging an exorbitant 72 rupee of taxes on petrol which cost around 30 rupee to import and was also keeping a hefty margin of profit.

Government ministers have defended the taxes saying it is needed for development activities and subsidies, but economic analysts have pointed out that more than 50 percent of the taxes are spent on the salaries and pensions of a bloated public service.

The entire capital budget of the government is also finance out of debt, and the government has not been able to even balance its current budget for decades.

The country has weak infrastructure due to years of chronic under-investment, especially in rural areas but the country has more than a 100 ministers out of a total of 225 lawmakers.