The government has slapped a new tax on petrol imports as the country struggles to come to terms with the steep rise in fuel prices in the local market.
The new tax has come into operation immediately after the Ceylon Petroleum Corporation (CPC) and the Lanka Indian Oil Company (LIOC) increased the prices of petrol and diesel to Rs. 157 and Rs. 110 respectively over the last weekend.
The LIOC entered the Sri Lankan market in a big way in 2003 during the then Premier Ranil Wickremesinghe s tenure.
The Treasury has imposed, what a well informed official engaged in the trade categorized as a Customs Import Duty (CID) on petrol imports with immediate effect. The official said the duty would add an additional Rs. 24.50 on every litre of petrol imported to the country by the CPC and LIOC. The duty was in addition to an excise import duty of Rs. 20 on a litre of petrol and Rs. 2.50 on a litre of diesel, the official said.
Fielding questions, he said altogether taxes on a litre of petrol imported by either CPC or LIOC would be Rs. 56.90. The bottom line was that a litre of petrol actually costs Rs. 56.90 less than the selling price, the sources said.
The sources said many countries including India depend heavily on revenue from petrol imports.
The CPC imports approximately 250 million litres of petrol annually as the only oil refinery at Sapugaskanda is capable of meeting only half of the total output expected from the CPC. The LIOC which controls about one third of the local market imports all its requirement through global tenders.
Authoritative government sources said they couldn t even think of removing the tax on petrol or at least reduce it due to escalating defence costs and unprecedented difficulties caused by sharp rise in the oil bill. The sources said the growing dependence on thermal power generation had worsened an already bad situation.
The LIOC Tuesday declared that it would pass the CID imposed on petrol to the consumer by jacking up the price of a litre of diesel by Rs. 20. The sources said even after the latest increase, the LIOC would take a loss of Rs. 4 on a litre of diesel sold on the Sri Lankan market. He said the LIOC continued to suffer a loss of Rs. 1.50 cents on a litre of petrol.