New Formula

April 23, 2007 (LBO) – Sri Lanka's largest petroleum retailer the state-owned Ceylon Petroleum Corporation (CPC) may return to monthly price adjustments once it had recovered current losses, the country's petroleum minister said. CPC shares Sri Lanka's petroleum distribution with Lanka IOC, a unit of Indian Oil Corporation, which has 30 percent of the market. It piggy-backs on CPC pricing. "We are working on a price formula which we want to implement after we recover losses within a month or two," Petroleum Minister A H M Fowzie told reporters.

"This is not the old formula we had but a new one."

CPC sought a 7 rupee increase in the price of diesel after diesel prices shot up from 71.98 dollars a barrel at the beginning of March to about 79.80 at the end of the month, but the government only gave it a 3 rupee increase.

"The government doesn't want to increase diesel prices because transport costs go up and electricity prices go up," CPC Chairman Ashantha de Mel said.

Stability Pact

A price formula to adjust fuel prices automatically was devised as part of an IMF backed rescue package after the country was driven into a balance of payments crisis and high inflation in 1999/2000 party due to fuel sub