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6 billion rupees in 2010 as due to rising cost and arbitrary political control of its retail prices, official data show. Sri Lanka has no cost-basis for fuel pricing and prices are controlled by arbitrary by the state while some fuels such as petrol used by motorcycle and small car owners is heavily taxed.
Diesel, though costing more than petrol to import and is used largely by business is lightly taxed or cross subsidized by petrol.
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Government taxes and controlled selling prices caused a 26.2 billion rupee loss in 2009, despite much lower international oil prices than in 2010.
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The Central Bank in its annual report said the main reasons for the losses were the sale of heavy fuel to the Ceylon Electricity Board (CEB) at low prices and a subsidy given to kerosene and fixed prices.
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The Ceylon Electricity Board however said it made a 5.0 billion rupee profit, inclusive of claims from the Treasury for street lighting. "Continuous operational losses of CPC has resulted in a significant loss in tax revenue to the government as well as high borrowing from the banking system by the CPC to undertake their financial oper