Lanka Govt. jacks up taxes on petrol to Rs. 56.90

  • 29 May 2008 06:26:23 GMT

    In the Buget Speech in Nov. 2007, the President proposed

    [to reduce the present 15 percent VAT on petrol to 5 percent and promised to remove the Excise Duty on petrol if the current price of crude oil standing at 97 US Dollars increased further. The kerosene and diesel prices will not be changed and the present levels will be maintained through a cross subsidy mechanism.]

    So, instead of REDUCING the excise duty if the world market price of oil goes above US$ 97/-, the duty is INCREASED. It is not only before Elections, false promises are made. Now, even the Budget Speech has to be taken with a pinch of salt!

    Mr. President, how long do you think you can continue to lie and cheat the people? You have taken the `credibility` of SL politicians to a new low.

  • 29 May 2008 07:39:57 GMT

    IOC says it has no money to import oil

    TIMES NEWS NETWORK

    New Delhi: IndianOil Corporation on Wednesday said it will limit motor fuels sales to what it can produce at its refineries domestically since it has no money to import petrol or diesel. The statement from company chairman Sarthak Behuria came after the stateowned company posted a Rs 414.27 crore loss in the quarter ended March 31 against a profit of Rs 1,502.69 crore in the previous corresponding period.

    This is the first time since 2005 that the state-owned company has posted a quarterly losss. Government bonds and other incomes helped the company to retain a standalone net profit of Rs 6,962.58 crore for the full 2007-08 fiscal but it marked a 7.16% decline from a net profit of Rs 7,499.47 crore in the 2006-07 fiscal.

    Total income rose to Rs 71,792.82 crore for the quarter under review from Rs 53,818.75 crore in the year-ago period. The company s board declared a dividend of 55% for the year 2007-08. That is, for every share of face value Rs 10, the shareholder would get a dividend of Rs 5.50.

    Behuria said the company is losing Rs 300 crore per day on sale of petrol, diesel, cooking gas and kerosene and would run out of cash to even import crude oil by September-end if fuel prices are not raised or duties cut. He said IOC was willing to meet a demand growth of 12-15% against actual rise of 22%.

    Crude price is ruling at over $130 a barrel in the international market and the company is losing Rs 16.34 per litre on sale of petrol, Rs 23.49 on diesel, Rs 28.72 on kerosene and Rs 305.9 on each cooking gas cylinder. Behuria said the loss on fuel sales had forced the company to put on hold all new projects. We don t have the ability to finance new projects. Our borrowings have risen to over Rs 41,000 crore from Rs 35,000 crore. We already have a debt-equity ratio of 1:1 and there is a limit upto which we can borrow, he said and saw borrowing rise to Rs 55,000 crore in next few months. `Beyond that we cannot borrow as we will not be able to service the debt.

    Behuria said the company earned a gross refining margin of $8.77 per barrel in Q4 against $5.74 a barrel in the same period in the previous year. Refining margin is the profit from processing of one barrel of oil. In 2007-08, it had posted a refinery margin of $9.02 per barrel as opposed to $4.19 a barrel in the previous year.

  • 29 May 2008 17:31:07 GMT

    These bloody big companies including CPC will never reduce the price of fuel oil and always increase giving silly reasons. As a responsible govt GOSL must have a control of this. CPC is a place where half of the workers are on political appointments and do not do much work. So when the price increases they put the cost of these guys salary and benefits to the fuel price. At least they must follow some formula when increase price so that public know what are the components which forced these companies to increase the price.

  • 29 May 2008 17:54:18 GMT

    This action will increase the price of everything and any thing. This action does not harm politicians and their supporters/relatives because their oversize vehicles are imported duty free and the petrol is free also the entertainment is free and their meals at the Parliament Dansela, is also almost free.

    So-called socialist system has worked for the politicians or the descendants of old aristocrats who helped the colonials to exploit the country for centuries.

    Old European colonies have the same problem all over the world because the aristocrats inherited the power from the colonials... where is the JVP now ? They also have become stooges of aristocrats.

  • 29 May 2008 18:38:13 GMT

    By definition, Socialism is a system of government that promotes State controlled ownership, production and distribution. In Sri Lanka we have neither the Socialism nor the Capitalism. We have a good mixture of both to suit the crafty politicians. Under the guise of Socialism, the ownership of business is held not by the People but by the politicians. This is the reason why all politicians want to hang on to power.

    Newest attempt of socialism was the Mihinair. Using state funds, they bought some obsolete aircrafts, built in 1980s . Billions of Rupees were lost. State owned Corporations such as the CPC, Steel, Textile etc. were places for employment of stooges/relatives of politicians. Moreover these corporations are monopolies.

    Under capitalism, the business is owned by experienced business people who invest their wealth. Responsibility of the government is to maintain competition by prohibiting monopoly and thereby the control of price of products. All so-called former socialist countries such as Russia, China, India etc. have dropped socialism and adopted capitalism. In Sri Lanka, politicians have poisoned the minds of people against the word Capitalism, because they want to own the entire country and keep the poor population behind time for the benefit of themselves and their families.

  • 29 May 2008 20:30:40 GMT

    This a measure to develop Sri Lanka and pay back Iran........and of course put few cents in Rajapakse corporation`s pocket !!

  • 29 May 2008 20:39:53 GMT

    This is my third letter on this subject. There are many reasons why the petrol price in Sri Lanka is way out of proportion to the income of average people. In the US, a gallon of gas is still under $ 4 (Rs. 400) including various taxes such as the sales tax. Etc.

    1. Although the price of crude oil is approximately $ 130, shipping cost could be less to Sri Lanka.

    2. Cost of labor is very high in US compared to those of Sri Lanka.

    Under the above two reasons alone, the price of petrol in Sri Lanka should be lower.

    Then what are the other reasons in SL?

    1. Our refinery is very old and the technology used, is almost obsolete. In the US heavy residue oil from the heart of the refinery, is processed further to produce Naphtha and LPG. Naphtha, in turn, is blended with Petrol and Diesel. LPG is used for other domestic purposes. May be we are producing Tar, instead.

    2. Other hidden big factor is that politicians and/or other higher official who negotiate price of crude oil in the producing countries, must be getting their tax free commissions. If they could siphon treasury funds to buy obsolete planes for Mihinair, they can easily make millions, almost daily, on crude oil shipment.

    Instead of getting into futile Air line business, GSL should have invested in upgrading the refinery. Socialism is working !!

  • 29 May 2008 20:42:56 GMT

    Withane,

    Is the whole imported oil refined in Sri Lanka ?

  • 30 May 2008 00:08:15 GMT

    Kural,

    I believe all crude oil imported to the island, is refined within SL. Otherwise there is no other user. I am not aware whether refined products such as petrol is imported perhaps by the Indian company. W...from USA

  • 30 May 2008 03:46:24 GMT

    Withane

    [Then what are the other reasons in SL]

    What about the CPC being used as a dumping ground with supporters of successive govts being given employment resulting in heavy over-staffing thereby increasing the costs?

    If any attempt is made to cut costs by cutting down on surplus staff, the unions are up in arms. The CPC will carry dead-wood for a long time to come and the public will have to bear the cost in the form of higher prices of CPC products.